A Company Ages Its Accounts Receivables to Determine Its End

question 96

Multiple Choice

A company ages its accounts receivables to determine its end of period adjustment for bad debts. At the end of the current year, management estimated that $15,750 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts had a debit balance of $175. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

• A)\(\begin{array} { | c | r | r | }
• \hline \text { Bad Debt Expense } & 15,750 & \\
• \hline \text { Allowance for Doubtful Accounts } & & 15,750 \\
• \hline
• \end{array}\)
• B)\(\begin{array} { | c | r | r | }
• \hline \text { Bad Debt Expense } & 15,575 & \\
• \hline \text { Allowance for Doubtful Accounts } & & 15,575 \\
• \hline
• \end{array}\)
• C)\(\begin{array} { | c | r | r | }
• \hline \text { Bad Debt Expense } & 15,925 & \\
• \hline \text { Allowance for Doubtful Accounts } & & 15,925 \\
• \hline
• \end{array}\)
• D)\(\begin{array} { | l | r | r | }
• \hline \text { Accounts Receivable } & 15,750 & \\
• \hline \text { Bad Debt Expense } & 175 & \\
• \hline \text { Sales } & & 15,925 \\
• \hline
• \end{array}\)
• E)\(\begin{array} { | l | r | r | }
• \hline \text { Accounts Receivable } & 15,925 & \\
• \hline \text { Allowance for Doubtful Accounts } & & 15,925 \\
• \hline
• \end{array}\)

---

Definitions:

Same Results

The occurrence of identical or very similar outcomes in repeated experiments or studies.

Validity

The extent to which a concept, conclusion, or measurement is well-founded and likely corresponds accurately to the real world.

Psychological Test

An instrument designed to measure unobserved constructs such as a person's cognitive abilities, behaviors, or personality traits.

Standardization

The process of making something conform to a standard in order to ensure consistency and comparability across different instances or measurements.