Wellington Corp

question 61

Multiple Choice

Wellington Corp. has outstanding accounts receivable totaling $5 million as of December 31 and sales on credit during the year of $25 million. There is also a debit balance of $20,000 in the allowance for doubtful accounts. If the company estimates that 8% of its outstanding receivables will be uncollectible, what will be the balance in the allowance for doubtful accounts after the year-end adjustment to record bad debt expense?

• A) $2,000,000.
• B) $ 380,000.
• C) $ 400,000.
• D) $ 420,000.

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Definitions:

International Treaty

An agreement under international law entered into by countries in written form.

NAFTA

The North American Free Trade Agreement, a treaty between the U.S., Canada, and Mexico that eliminated most tariffs on trade between the countries.

Uniform Commercial Code

A complete array of statutes that regulate all business dealings across the United States.

NAFTA

The North American Free Trade Agreement, a treaty between the United States, Canada, and Mexico that eliminates most tariffs on trade between them.