The Following Selected Amounts Are Reported on the Year-End Unadjusted

question 81

Multiple Choice

The following selected amounts are reported on the year-end unadjusted trial balance report for a company that uses the percent of sales method to determine its bad debts expense. All sales are made on credit.Based on past experience,the company estimates 1% of credit sales to be uncollectible.What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

• A)Debit Bad Debts Expense $19,750;credit Allowance for Doubtful Accounts $19,750.
• B)Debit Bad Debts Expense $15,225;credit Allowance for Doubtful Accounts $15,225.
• C)Debit Bad Debts Expense $22,250;credit Allowance for Doubtful Accounts $22,250.
• D)Debit Bad Debts Expense $7,350;credit Allowance for Doubtful Accounts $7,350.
• E)Debit Bad Debts Expense $21,000;credit Allowance for Doubtful Accounts $21,000.

---

Definitions:

Behavioral Economists

Scholars who study the effects of psychological, cognitive, emotional, cultural, and social factors on the economic decisions of individuals and institutions.

Faulty Heuristics

Incorrect or misleading cognitive shortcuts that are used to make decisions or solve problems.

Neurons

Specialized cells within the nervous system that transmit information through electrical and chemical signals.

Visual Information

Data or knowledge that can be received and processed visually, often via illustrations, graphs, images, or video.