Allowance for Doubtful Accounts Has a Credit Balance of $2,100

question 51

Multiple Choice

Allowance for Doubtful Accounts has a credit balance of $2,100 at the end of the year (before adjustment) , and an analysis of customers' accounts indicates uncollectible receivables of $19,700. Which of the following entries records the proper adjustment for Bad Debt Expense?

• A) debit Allowance for Doubtful Accounts, $17,600; credit Bad Debt Expense, $17,600
• B) debit Allowance for Doubtful Accounts, $21,800; credit Bad Debt Expense, $21,800
• C) debit Bad Debt Expense $21,800; credit Allowance for Doubtful Accounts, $21,800
• D) debit Bad Debt Expense, $17,600; credit Allowance for Doubtful Accounts, $17,600

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Definitions:

Consolidated Net Income

The total net income of a parent company and its subsidiaries after eliminating intercompany transactions, presented in a consolidated financial statement.

Non-Controlling Interest

The portion of equity in a subsidiary not attributable, directly or indirectly, to a parent company.

Intercompany Profits

Profits that arise from transactions between companies under the same parent company, usually eliminated during consolidation of financial statements.

Non-controlling Interest

An ownership stake in a corporation where the stake does not grant the investor sufficient voting power to dictate corporate policy.