A Company Uses the Percent of Sales Method to Determine

question 5

Multiple Choice

A company uses the percent of sales method to determine its bad debts expense.At the end of the current year,the company's unadjusted trial balance reported the following selected amounts: All sales are made on credit.Based on past experience,the company estimates 0.6% 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 $2,130;credit Allowance for Doubtful Accounts $2,130.
• B)Debit Bad Debts Expense $2,630;credit Allowance for Doubtful Accounts $2,630.
• C)Debit Bad Debts Expense $4,300;credit Allowance for Doubtful Accounts $4,300.
• D)Debit Bad Debts Expense $4,800;credit Allowance for Doubtful Accounts $4,800.
• E)Debit Bad Debts Expense $5,300;credit Allowance for Doubtful Accounts $5,300.

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Definitions:

Behavioral Medicine

An interdisciplinary field that integrates behavioral, psychosocial, and biomedical knowledge to prevent, diagnose, and treat various medical conditions.

Psychophysiological Disorder

Conditions where psychological factors significantly affect physiological functioning, leading to physical symptoms.

Biochemical Activity

Refers to the chemical processes and reactions that occur within living organisms, essential for maintaining life and health.

Behavioral Changes

Alterations in the pattern of human behavior that may result from experiences, interventions, or internal processes.