14. Consider Accounts Receivable: The two primary accounting issues that are of importance to the accountant are: A) Recognition and placement on the financial statement B) Recognition and Bad Debt Expense on the income statement C) Recognition and valuation D) None of the above 15. Accounts receivable balances are required to be reflected at net realizable value as of the balance sheet date. Use of the allowance method for estimating bad debit is the preferred method because it: A) is required by GAAP. B) it provides for better matching of revenue with expenses. C) A and B D) None of the above 16. Using the allowance method, Bad Debt Expense is recognized and recorded: A) when an individual account is written off. B) once a year when the books are formally closed. C) when the loss amount is known. D) for an amount that the company estimates it will not collect. 17. Apply the allowance method: Mouse Ears Inc. has been in business for five years. At the end of each reporting period management uses the allowance method for estimating and recognizing bad debt expense. You have been hired to prepare the journal entry to recognize bad debt using management's estimate for this reporting period. Mouse Ears Inc.'s management provides you with the following information: Net sales of $5,250,000, accounts receivable of $820,000 and the allowance for doubtful accounts of $200,000. After management aged the receivables, they concluded that 25% of the $820,000 accounts receivable would not be collectible. Using the allowance method - What would the correct journal entry be to record / to recognize bad debt expense based on management's estimate? A) Bad Debts Expense $205,000 Allowances for Doubtful Accounts $205,000 B) Bad Debts Expense $5,000 Allowance for Doubtful Accounts $5,000 C) No entry needs to be made