Allowance for Doubtful Accounts Has a Debit Balance of $2,300

question 159

Multiple Choice

Allowance for Doubtful Accounts has a debit balance of $2,300 at the end of the year (before adjustment) . The company prepares an analysis of customers' accounts and estimates the amount of uncollectible accounts to be $31,900. Which of the following adjusting entries is needed to record the bad debt expense for the year?

• A) debit Bad Debt Expense, $34,200; credit Allowance for Doubtful Accounts, $34,200
• B) debit Allowance for Doubtful Accounts, $34,200; credit Bad Debt Expense, $34,200
• C) debit Allowance for Doubtful Accounts, $29,600; credit Bad Debt Expense, $29,600
• D) debit Bad Debt Expense, $29,600; credit Allowance for Doubtful Accounts, $29,600

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Definitions:

Monopolistic Competitor

A market structure where many firms sell products that are similar but not identical, thereby having some control over their prices.

Represent

To be a sign or symbol of something; or to act on behalf of someone or something in a legal or formal context.

Monopolistically Competitive Firms

Monopolistically competitive firms operate in a market structure where many companies sell products that are similar but not identical, leading to some degree of market power.

Long-Run Equilibrium

The intersection of the AD and LRAS curves, when wages and prices have adjusted to their final equilibrium levels.