An Aging of a Company's Accounts Receivable Indicates the Estimate

question 146

Multiple Choice

An aging of a company's accounts receivable indicates the estimate of uncollectible receivables totals $2,000. If Allowance for Doubtful Accounts has a $200 credit balance, the adjustment to record the bad debt expense for the period will require a

• A) debit to Bad Debt Expense for $2,200.
• B) debit to Bad Debt Expense for $2,000.
• C) debit to Bad Debt Expense for $1,800.
• D) credit to Allowance for Doubtful Accounts for $3,000.

---

Definitions:

365-Day Year

A method used for calculating interest based upon a calendar year, counting all 365 days (or 366 in a leap year), typically used for more precise financial calculations.

Ordinary Simple Interest

Interest calculated on the principal amount of a loan or deposit, based on a simple calculation without compounding.

360-Day Year

An accounting method where the year is assumed to have 360 days, simplifying interest calculation by using 30-day months.

Ordinary Simple Interest Rate

An interest rate calculation where interest is only earned on the original principal, not on accrued interest.