You Have Just Received Notice That a Customer of Yours

question 94

Multiple Choice

You have just received notice that a customer of yours with an Account Receivable balance of $100 has gone bankrupt and will not make any future payments. Assuming you use the allowance method, the entry you make is to

• A) debit Bad Debt Expense and credit Allowance for Doubtful Accounts.
• B) debit Bad Debt Expense and credit Accounts Receivable.
• C) debit Allowance for Doubtful Accounts and credit Accounts Receivable.
• D) debit Allowance for Doubtful Accounts and credit Bad Debt Expense

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Definitions:

Optimal Solution

The most efficient, effective, or desirable solution to a problem or the best decision given the constraints.

Total Cash

The overall amount of liquid assets available to an individual or organization.

Price/demand Elasticity

A measure of how much the demand for a product changes in response to a change in its price.

Continuous Values

Numerical data that can take any value within a specified range, often associated with measurements.