Craigmont Uses the Allowance Method to Account for Uncollectible Accounts

question 77

Multiple Choice

Craigmont uses the allowance method to account for uncollectible accounts.Its year-end unadjusted trial balance shows Accounts Receivable of $104,500,allowance for doubtful accounts of $665 (credit) and sales of $925,000.If uncollectible accounts are estimated to be 0.5% of sales,what is the amount of the bad debts expense adjusting entry?

• A)$4,625
• B)$3,960
• C)$5,290
• D)$4,750
• E)$4,825

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Definitions:

Restitution

The act of compensating for loss, damage, or injury caused; involves returning to the original state or compensating for loss.

Breach Of Contract

Neglecting to comply with any aspect of a contract, documented or verbal, without a lawful excuse.

Rescission

The legal act of cancelling or terminating a contract, returning the parties, as much as possible, to their positions prior to entering the agreement.

Rebuilt Transmission

A vehicle transmission that has been disassembled, inspected, repaired, and reassembled with new or refurbished components to meet original specifications.