Question 53 (2 points)

Centrum Ltd. has a customer with an Accounts Receivable balance of $50,000. Centrum Ltd. has just received notice that the customer has gone bankrupt and will only be able to pay $10,000 of the balance owing. Assume Centrum Ltd. uses the allowance method for uncollectible accounts. On receipt of the bankruptcy notice, Centrum Ltd. will make the following entry:

Question 53 options:

	debit Allowance for Doubtful Accounts $50,000 and credit Bad Debts Expense $50,000.
	debit Bad Debts Expense $10,000 and credit Accounts Receivable $10,000.
	debit Bad Debts Expense $50,000 and credit Allowance for Doubtful Accounts $50,000.
	debit Allowance for Doubtful Accounts $40,000 and credit Accounts Receivable $40,000.
	none of the above.