At the End of 2012, Murray State Lenders Had a Balance

question 113

Multiple Choice

At the end of 2012, Murray State Lenders had a balance in its Allowance for Uncollectible Accounts of $4,500 (credit) before any adjustment. The company estimated its future uncollectible accounts to be $12,000 using the percentage-of-receivables method. Murray State's adjustment on December 31, 2012, to record its estimated uncollectible accounts included a:

• A) Credit to Allowance for Uncollectible Accounts of $12,000.
• B) Debit to Bad Debt Expense of $7,500.
• C) Credit to Allowance for Uncollectible Accounts of $7,500.
• D) Both b and c.

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Definitions:

Quantity Supplied

The total amount of a product or service that producers are willing and able to sell at a given price in a specific time period.

Supply

The aggregate supply of a certain item or service made available for consumer purchase.

Price Elasticity

The measure of how much the quantity demanded of a good responds to a change in the price of that good, indicating its sensitivity to price changes.

Midpoint Method

A technique used to calculate the price elasticity of demand or supply, avoiding the problem of using different base values for percentage calculations.