Astate-wide alliance of independent hospitals has formed in order to do group purchasing of medical supplies. group purchasing allows the hospital alliance to negotiate lower prices with suppliers because of the large quantity of materials ordered. this is an example of the advantage of resulting from an alliance.

Acompany has $80,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts. experience suggests that 6% of outstanding receivables are uncollectible. the current credit balance (before adjustments) in the allowance for doubtful accounts is $1,200. the journal entry to record the adjustment to the allowance account includes a debit to bad debts expense for $4,800. true or false