Craigmont Uses the Allowance Method to Account for Uncollectible Accounts

question 76

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 4% of accounts receivable,what is the amount of the bad debts expense adjusting entry?

• A)$4,845
• B)$4,180
• C)$3,515
• D)$3,700
• E)$3,850

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Definitions:

Common Stock

A type of ownership in a corporation that grants holders voting rights and a share in the company’s profits via dividends.

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Subscription Price

The price at which existing shareholders are allowed to purchase new shares of a company, often during a rights offering.

Stock Price

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