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.

Interpret changes in financial position and performance over time through financial statements.

Recognize the importance of ethics and regulations in accounting (Sarbanes-Oxley Act, ethical standards).

Account for the initial and subsequent measurement of assets, liabilities, and equity.

Understand the role of dividends in a business and their effect on equity.

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Definitions:

Publication Bias

The tendency of scientific journals preferentially to publish studies with strong results.

Manipulate Datasets

The process of changing or adjusting data in order to analyze it, correct errors, or draw specific conclusions.

Research Process

The systematic series of actions necessary to undertake and complete research activities, from the identification of a research problem to the presentation of results.

Correlation Coefficient

A statistical measure that indicates the extent to which two or more variables fluctuate together.