A Company Has $90,000 in Outstanding Accounts Receivable and It

question 43

Multiple Choice

A company has $90,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts. Experience suggests that 6% of outstanding receivables are uncollectible. The current debit balance (before adjustments) in the allowance for doubtful accounts is $800. The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for:

• A) $4,600
• B) $5,400
• C) $6,200
• D) $6,800
• E) None of these

---

Definitions:

Effortful Processing

A type of information processing that requires attention and conscious effort in order to encode or remember information.

Mental Image

A representation of sensory information in the mind, which is not currently being perceived, such as visualizing an object, sound, or situation.

Street Corner

Literally, the point at which two streets meet; often used to denote a specific location within an urban area.

Short-Term Memory

The capacity for holding a small amount of information in mind in an active, readily available state for a short period of time.