As of December 31,Mesa Company Has a Balance of $5,000

question 41

Multiple Choice

As of December 31,Mesa Company has a balance of $5,000 in trade receivables of which $500 is more than 30 days overdue.Mesa has a credit balance of $45 in the allowance for doubtful accounts.Mesa estimates its bad debts losses at 1% of current accounts and 10% of accounts over thirty days.What adjustment should Mesa make to the allowance for doubtful accounts?

• A)$50 (credit).
• B)$55 (credit).
• C)$95 (credit).
• D)None,the current balance is correct.

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Definitions:

Regression Equation

An equation that describes the relationship between a dependent variable and one or more independent variables, typically used for prediction or forecasting.

Regression Model

A statistical technique that models and analyzes the relationship between a dependent variable and one or more independent variables.

Marital Status

A demographic variable indicating the legal relationship status of an individual, such as single, married, divorced, or widowed.

Indicator Variables

Variables created to represent categorical data in numerical form, often used in statistical models to include qualitative data.