Answer :
Balance sheet - The bad debt cost equals $6,675
An adjustment to the balance sheet is what?
The following adjustments to the balance sheet are referred to as "balance sheet adjustments": I the removal of cash, investments, deferred income taxes, officer's life insurance, intangible asset pension plans, income taxes owing, all notes owing (including the bank note owing), pension liability, common stock, and all other payable notes.
$1,150 is the first limit for past-due accounts.
$1,875 in accounts were written off.
Beginning allowance for uncollectible accounts = Unadjusted balance of allowance for uncollectible accounts - Written-off accounts
The unadjusted balance of the provision for doubtful accounts is equal to $1,150 - $1,875
Unadjusted allowance for doubtful accounts balance = $725
$5,950 is the final balance of the allowance for past-due accounts.
Bad debt expense is equal to the final balance of the provision for doubtful accounts. - The unadjusted balance of the provision for bad debts
Bad debt cost is $5,950 - ($725 less).
Bad debt cost equals $6,675
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