An Aging of a Company's Accounts Receivable Indicates That the Estimate

question 55

Multiple Choice

An aging of a company's accounts receivable indicates that the estimate of uncollectible accounts totals $6,400. If Allowance for Doubtful Accounts has a $1,300 debit balance, the adjustment to record the bad debt expense for the period will require a

• A) debit to Bad Debt Expense for $7,700
• B) debit to Bad Debt Expense for $6,400
• C) debit to Bad Debt expense for $5,100
• D) credit to Allowance for Doubtful Accounts for $1,300

---

Definitions:

Purchase Discounts

Reductions in price given by a supplier to a buyer for early payment within a specified period.

Purchase Discounts Lost

The additional expense a company incurs when it fails to take advantage of discounts offered by suppliers for early payment.

Voucher Register

A voucher register is a record keeping system where vouchers are indexed and stored, detailing the payment of a transaction.

Vouchers Payable

A liability account that records the obligation to pay for goods or services that have been received, but not yet paid for.