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:

Double Marginalization

A situation where both the manufacturer and retailer markup prices, leading to higher final prices for consumers.

Manufacturer

A business that uses raw materials, components, or parts to make a finished product that can be sold in the marketplace.

Retailer

A business or person that sells goods to consumers for personal or household use.

Faulty Design

A flaw in the planning and execution of a product, building, or system that leads to it not functioning as intended.