Sanchez Inc If Sanchez Estimates Bad Debts at 5% of Net Credit

question 83

Multiple Choice

Sanchez Inc. sells to customers only on credit. For the year ended December 31, 2017, the following information is provided:
$\begin{array}{lrr} \text {Sales revenue } &\$850,000\\ \text {Accounts receivable, 1/01/17 } &230,000\\ \text { Allowance for doubtful accounts, \( 12 / 31 / 17 \) (before adjustment for bad debts) } &600\\ \text { Collections during 2017 } &470,000\\ \text { Accounts written off as uncollectible during 2017 } &13,000\\ \text {Sales returns } &7,000\\\end{array}$


If Sanchez estimates bad debts at 5% of net credit sales, how much is bad debt expense?

• A)$34,000
• B)$15,200
• C)$23,400
• D)$42,150

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Definitions:

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The ability to perform more than one task or activity over a short period, often by switching focus from one task to another.

Prototype

An original model or first form of something from which other forms are copied or developed, often used in the context of design and innovation.

Heuristic

A problem-solving strategy using a practical method or various shortcuts to produce solutions that may not be optimal but are sufficient for reaching immediate goals.

Prototype

An original model or preliminary version of a product from which other forms are developed or copied.