Allowance for Doubtful Accounts Has a Credit Balance of $1,500

question 5

Multiple Choice

Allowance for Doubtful Accounts has a credit balance of $1,500 at the end of the year (before adjustment) , and an analysis of customers' accounts indicates uncollectible receivables of $17,900. Which of the following entries records the proper adjustment for Bad Debt Expense?

• A) debit Allowance for Doubtful Accounts, $16,400; credit Bad Debt Expense, $16,400
• B) debit Allowance for Doubtful Accounts, $19,400; credit Bad Debt Expense, $19,400
• C) debit Bad Debt Expense $19,400; credit Allowance for Doubtful Accounts, $19,400
• D) debit Bad Debt Expense, $16,400; credit Allowance for Doubtful Accounts, $16,400

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Definitions:

Money Supply

The entire sum of cash, coins, and account balances in checking and savings that constitute the monetary assets in an economy at a specific time.

Real GDP

The total value of all goods and services produced by a country over a specific time period, adjusted for inflation, reflecting the actual productivity of an economy.

Velocity of Money

The rate at which money is exchanged in an economy, often used to measure the activity level of economic transactions.

Inflation Rate

The inflation rate is the percentage increase in the general level of prices for goods and services in a country over a period of time.