A Company Used the Percent of Sales Method to Determine

question 73

Multiple Choice

A company used 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: $\begin{array}{|l|r|}\hline \text { Accounts receivable } & \$ 245,000 \text { debit } \\\hline \text { Allowance for uncollectible accounts } & 300 \text { credit } \\\hline \text { Net Sales } & 900,000 \text { credit } \\\hline\end{array}$ All sales are made on credit. Based on past experience, the company estimates 0.5% of credit sales to be uncollectible. What amount should be debited to Bad Debts Expense when the year-end adjusting entry is prepared?

• A) $925
• B) $1,225
• C) $4,200
• D) $4,500
• E) $45,000

---

Definitions:

Late Childhood

A developmental stage covering the period from around age 6 to the onset of puberty, marked by significant cognitive, emotional, and social changes.

School Phobia

Unrealistic fear of going to school; may be a form of separation anxiety disorder or social phobia.

Fearful

Characterized by fear; feeling dread or apprehension about a possible event or situation.

Behavior Therapy

A type of psychotherapy that focuses on changing specific behaviors and uses various techniques to stop undesirable habits or behaviors.