Financial and Managerial Accounting (Looseleaf) (Custom Package)
Financial and Managerial Accounting (Looseleaf) (Custom Package)
6th Edition
ISBN: 9781259754883
Author: Wild
Publisher: MCG
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Chapter 7, Problem 1MCQ
To determine

Accounts Receivable:

It refers to the amount that is to be received by a company for providing goods and services on credit. It is an asset account.

Bad Debts:

It refers to the amount that was expected to be received on credit sales but went uncollectible. It is a loss to the company.

To identify: The correct option for the amount of bad debts expense recorded at December 31.

Expert Solution & Answer
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Explanation of Solution

‘Option d- $4,698’ is correct.

    BadDebtsExpense=[ ( TotalAccountsReceivable ×PercentageofAccountsReceivableUncollectible ) AllowanceforDoubtfulDebts ] =[ ( $125,650×4% )$328 ] =$4,698

Thus, bad debts expenses recorded at December 31 are $4,698.

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Chapter 7 Solutions

Financial and Managerial Accounting (Looseleaf) (Custom Package)

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Accounts Receivable and Accounts Payable; Author: The Finance Storyteller;https://www.youtube.com/watch?v=x_aUWbQa878;License: Standard Youtube License