Tanning Company Analyzes Its Receivables to Estimate Bad Debt Expense

question 26

Multiple Choice

Tanning Company analyzes its receivables to estimate bad debt expense.The accounts receivable balance is $390,000 and credit sales are $1,300,000.An aging of accounts receivable shows that approximately 5% of the outstanding receivables will be uncollectible.What adjusting entry will Tanning Company make if Allowance for Doubtful Accounts has a credit balance of $2,500 before adjustment?

• A)Bad Debt Expense 17,000Allowance for Doubtful Accounts 17,000
• B)Bad Debt Expense 19,500Allowance for Doubtful Accounts 19,500
• C)Bad Debt Expense 22,000Allowance for Doubtful Accounts 22,000
• D)Bad Debt Expense 65,000Allowance for Doubtful Accounts 65,000

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Definitions:

Neuron

A distinct cell responsible for conducting nerve messages; referred to as a nerve cell.

Neural Message

The information conveyed by neurons through electrical and chemical signals across synapses to communicate with other neurons, muscles, or glands.

Resting Potential

The electrical charge difference across the neuronal membrane when the neuron is not actively firing.

Action Potential

A brief electrical impulse by which information is transmitted along the axon of a neuron.