The General Ledger Account for Accounts Receivable Shows a Debit

question 37

Multiple Choice

The general ledger account for Accounts Receivable shows a debit balance of $50,000.Allowance for Uncollectible Accounts has a credit balance of $3,000.Net sales for the year were $500,000.In the past,3 percent of sales have proved uncollectible,and an aging of accounts receivable resulted in an estimate of $20,000 of uncollectible accounts receivable.
-Using the accounts receivable aging method,the entry to record Uncollectible Accounts Expense would be:

• A)Uncollectible Accounts Expense 21,500 Allowance for Uncollectible Accounts 21,500
• B)Uncollectible Accounts Expense 17,000 Allowance for Uncollectible Accounts 17,000
• C)Allowance for Uncollectible Accounts 20,000 Uncollectible Accounts Expense 20,000
• D)Allowance for Uncollectible Accounts 23,000 Uncollectible Accounts Expense 23,000

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Definitions:

Statement Of Cash Flows

A financial document summarizing total cash inflows from operational activities and external investments alongside outflows for business operations and investment expenditures over a specific timeframe.

Investing Activities

Finance-related activities in a company that involve acquiring or disposing of long-term assets.

Net Cash

The total amount of cash and cash equivalents a company possesses after deducting all liabilities.

Free Cash Flow

This represents the amount of cash a company generates from its operations after accounting for capital expenditures, showing the liquidity available for expansion, dividends, or debt repayment.