Suppose Sears Credit Card has two aging categories for its accounts receivable: accounts that are 0-30...

 

Transcribed Image Text:

Suppose Sears Credit Card has two aging categories for its accounts receivable: accounts that are 0-30 days old and accounts that are 31-90 days old. If any portion of an account receivable balance is over 90 days, that portion is written off as bad debt. An analysis of accounting records leads to the following accounts receivable matrix (P). Category 1 4 0.0 0.0 3 1 1.0 2 0.0 0.0 2 0.0 0.6 1.0 0.0 3 0.0 0.3 0.1 4 0.4 0.2 0.3 0.1 1. Paid category 2. Bad debt category 3. 0-30 days old category 4. 31-90 days old category Why is p22 equal to 1.0 while p21. P23, and p24 (in the same row) are all zeros? O A. It is because the written off balance must be equal to the paid back balance. O B. It is because the credit card holder has already paid off the entire balance they owed. OC.t is because all doubtful account balances must be written off eventually. O D.Itis because Sears has aiready written off the balance as uncollected bad debt. O E. It is because all credit card holders must pay back all balances. Suppose Sears Credit Card has two aging categories for its accounts receivable: accounts that are 0-30 days old and accounts that are 31-90 days old. If any portion of an account receivable balance is over 90 days, that portion is written off as bad debt. An analysis of accounting records leads to the following accounts receivable matrix (P). Category 1 4 0.0 0.0 3 1 1.0 2 0.0 0.0 2 0.0 0.6 1.0 0.0 3 0.0 0.3 0.1 4 0.4 0.2 0.3 0.1 1. Paid category 2. Bad debt category 3. 0-30 days old category 4. 31-90 days old category Why is p22 equal to 1.0 while p21. P23, and p24 (in the same row) are all zeros? O A. It is because the written off balance must be equal to the paid back balance. O B. It is because the credit card holder has already paid off the entire balance they owed. OC.t is because all doubtful account balances must be written off eventually. O D.Itis because Sears has aiready written off the balance as uncollected bad debt. O E. It is because all credit card holders must pay back all balances.

Answer rating: 100% (QA)

Solution C It is because all doubtful account balanc... View the full answer