At the End of the Current Year, Accounts Receivable Has

question 64

Multiple Choice

At the end of the current year, Accounts Receivable has a balance of $550,000; Allowance for Doubtful Accounts has a credit balance of $5,500; and net sales for the year total $2,500,000. An analysis of receivables estimates uncollectible receivables as $25,000. Determine the amount of the adjusting entry for bad debt expense and the adjusted balance of Allowance of Doubtful Accounts, respectively.

• A) $19,500 and $25,000
• B) $30,500 and $525,000
• C) $19,500 and $525,000
• D) $30,500 and $25,000

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Definitions:

TIPS

Treasury Inflation-Protected Securities, a type of U.S. treasury security indexed to inflation to protect investors from the negative effects of rising prices.

Default-Risk

The risk that a borrower fails to make the required payments on a debt obligation, leading to potential losses for the lender or investor.

Higher Rates

Typically refers to an increase in interest rates, which can affect borrowing costs, investment returns, and economic activity.

Standard & Poor's

A financial market intelligence company known for its stock market indices such as the S&P 500, as well as its ratings of the creditworthiness of borrowers.