Allowance for Doubtful Accounts Has a Credit Balance of $1,300

question 71

Multiple Choice

Allowance for Doubtful Accounts has a credit balance of $1,300 at the end of the year (before adjustment) . The company prepares an analysis of customers' accounts to estimate the amount of uncollectible accounts of $41,900. Which of the following adjusting entries would be made to record the Bad Debt Expense for the year?

• A) debit Allowance for Doubtful Accounts, $40,600; credit Bad Debt Expense, $40,600
• B) debit Allowance for Doubtful Accounts $43,200; credit Bad Debt Expense, $43,200
• C) debit Bad Debt Expense, $43,200; credit Allowance for Doubtful Accounts, $43,200
• D) debit Bad Debt Expense, $40,600; credit Allowance for Doubtful Accounts, $40,600

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Definitions:

Intangible Assets

Non-physical assets that have value due to the rights or information they provide, such as trademarks, patents, and goodwill.

Net Income

The total earnings of a company after subtracting all expenses, including taxes and operating expenses.

Land Improvements

Enhancements made to a plot of land to increase its value or usability, such as landscaping, fencing, and paving.

Intangible Assets

Non-physical assets held by a company that can produce economic benefits, such as patents, trademarks, copyrights, and goodwill.