Tanning Company Analyzes Its Receivables to Estimate Bad Debt Expense

question 79

Multiple Choice

Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is $300,000 and credit sales are $1,000,000. An aging of accounts receivable shows that approximately 5% of the outstanding receivables will be uncollectible. What adjusting entry will Tanning Company make if the Allowance for Doubtful Accounts has a credit balance of $2,000 before adjustment?

• A) Bad Debt Expense 13,000 Allowance for Doubtful Accounts 13,000
• B) Bad Debt Expense 15,000 Allowance for Doubtful Accounts 15,000
• C) Bad Debt Expense 17,000 Allowance for Doubtful Accounts 17,000
• D) Bad Debt Expense 20,000 Allowance for Doubtful Accounts 20,000

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Definitions:

Human Resource Management

The strategic approach to the effective management of people in an organization, which helps businesses gain a competitive advantage. It's designed to maximize employee performance in service of the employer's strategic objectives.

Critical Industrial Relations

The study and practice of managing and improving relationships between employers and employees, particularly in contexts where conflicts or disputes might arise.

Pragmatic, Business-Like Approach

A practical and realistic method of dealing with business situations, focusing on results and efficiency instead of theory or ideals.

Labor Unions

Organizations that represent the collective interests of workers, negotiating wages, benefits, and working conditions with employers.