Allowance for Doubtful Accounts Has a Credit Balance of $800

question 185

Multiple Choice

Allowance for Doubtful Accounts has a credit balance of $800 at the end of the year (before adjustment) , and an analysis of accounts in the customer ledger indicates that the estimated amount of uncollectible accounts should be $16,000. Based on the estimate above, which of the following adjusting entries should be made?

• A) debit Bad Debt Expense, $800; credit Allowance for Doubtful Accounts, $800
• B) debit Bad Debt Expense, $15,200; credit Allowance for Doubtful Accounts, $15,200
• C) debit Allowance for Doubtful Accounts, $800; credit Bad Debt Expense, $800
• D) debit Bad Debt Expense, $16,800; credit Allowance for Doubtful Accounts, $16,800

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Definitions:

Purchase Transactions

Financial exchanges or agreements where goods or services are bought and paid for.

Strategic Supply Management

The process of planning, implementing, and controlling the operations of the supply chain as efficiently as possible.

Make

The decision process involved in determining whether to produce an item internally or buy it from an external supplier.

Buy

The action of acquiring ownership or the right to use a product or service through payment or exchange.