Allowance for Doubtful Accounts Has a Debit Balance of $2,500

question 74

Multiple Choice

Allowance for Doubtful Accounts has a debit balance of $2,500 at the end of the year (before adjustment) , and bad debt expense is estimated at 4% of net credit sales. If net credit sales are $800,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts is

• A) $29,500
• B) $34,500
• C) $32,000
• D) cannot be determined

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Definitions:

Net Cash

Describes the amount of cash available after accounting for all cash inflows and outflows.

Statement Of Cash Flows

A financial report that shows how changes in balance sheet accounts and income affect cash and cash equivalents, breaking the analysis down to operating, investing, and financing activities.

Financial Ratios

Financial ratios are quantifiable measures used to evaluate a company's financial performance by comparing two line items from financial statements.

Industry

A category of businesses that produce or sell similar products, services, or are involved in the same level of economic activity.