Jumpin Corporation Uses the Percent-Of-Sales Method to Estimate Uncollectibles

question 162

Multiple Choice

Jumpin Corporation uses the percent-of-sales method to estimate uncollectibles. Net credit sales for the current year amount to $2,020,000, and management estimates 3% will be uncollectible. The Allowance for Uncollectible Accounts prior to adjustment has a debit balance of $1600. The amount of Uncollectible-Account Expense reported on the income statement will be:

• A)$1600.
• B)$59,000.
• C)$60,600.
• D)$62,200.

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Definitions:

Customer Satisfaction

A measure of how products and services supplied by a company meet or exceed customer expectation.

Appraisal Costs

Costs associated with the inspection and testing of both raw materials and finished products to ensure quality standards are met.

Prevention Costs

Costs that are incurred to keep defects from occurring.

Internal Failure Costs

Costs associated with defects found before the delivery of a product to the customer, including scrap, rework, and downtime.