Sigma Reports Net Credit Sales of $400,000

question 96

Multiple Choice

Sigma reports net credit sales of $400,000.There is a credit balance of $1,000 in the Allowance for Doubtful Accounts.Uncollectible accounts are estimated to be 2.5% of net credit sales.Under the income statement approach,the adjusting entry would require a debit to Bad Debt Expense for:

• A)$9,000.
• B)$10,000.
• C)$9,975.
• D)some other number.

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Definitions:

Part Performance

A legal doctrine that allows a court to enforce an otherwise unenforceable contract based on a party's partial completion of the contract terms.

Statute of Frauds

A law requiring certain types of contracts to be in writing and signed to be enforceable.

UCC's Writing

Refers to the requirement under the Uniform Commercial Code that certain contracts, to be enforceable, must be in writing.

Quantity

A measurable amount or the total number, volume, or extent of something.