Question

Events that occur after the December 31, 2018 balance sheet date, but before the balance sheet is issued, and provide additional evidence about conditions that existed at the balance sheet date and affect the realizability of accounts receivable should be:_______
a. discussed only in the MD&A (Management's Discussion and Analysis) section of the annual report.
b. disclosed only in the Notes to the Financial Statements.
c. used to record an adjustment to Bad Debt Expense for the year ending December 31, 2018
d. used to record an adjustment directly to the Retained Earnings account

Answer 1

Answer: c. used to record an adjustment to Bad Debt Expense for the year ending December 31, 2018

Explanation:

Since the events occur after the balance sheet date, but before the balance sheet is issued, and gives more evidence about conditions that existed at the balance sheet date, then it should be used to record an adjustment to Bad Debt Expense for the year ending December 31, 2018

This is because an adjustment gives more information to the information already given in the balance sheet. Therefore, the correct option is C.