The Allowance for Bad Debts Account Has a Debit Balance

question 183

Multiple Choice

The Allowance for Bad Debts account has a debit balance of $8000 before the adjusting entry for bad debts expense.After analyzing the accounts in the accounts receivable subsidiary ledger using the aging-of-receivables method,the company's management estimates that uncollectible accounts will be $15,000.What amount of bad debts expense will be reported on the income statement?

• A) $4000
• B) $23,000
• C) $7000
• D) $15,000

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Definitions:

Relevant Market

A market segment within which a particular product is sold, characterized by its competitiveness and substitutability.

Trade Crossed State Lines

Refers to the exchange of goods, services or capital between states, often subject to federal regulations in contexts such as interstate commerce.

Behavioral Approach

A strategy in psychology and economics focusing on how individual behavior is influenced by psychological factors and decision-making processes.

Antitrust Laws

Legislation enacted to prevent new monopolies from forming and to break up those that already exist to ensure competition in the marketplace.