The Following Selected Amounts Are Reported on the Year-End Unadjusted

question 67

Multiple Choice

The following selected amounts are reported on the year-end unadjusted trial balance report for a company that uses the percent of sales method to determine its bad debts expense. $$\begin{array} { | l | r | l | } \hline \text { Accounts receivable } & \$ 435,000 & \text { Debit } \\\hline \text { Allowance for Doubtful Accounts } & 1,250 & \text { Debit } \\\hline \text { Net Sales } & 2,100,000 & \text { Credit } \\\hline\end{array}$$ All sales are made on credit. Based on past experience, the company estimates 1% of credit sales to be uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

• A)Debit Bad Debts Expense $19,750; credit Allowance for Doubtful Accounts $19,750.
• B)Debit Bad Debts Expense $15,225; credit Allowance for Doubtful Accounts $15,225.
• C)Debit Bad Debts Expense $22,250; credit Allowance for Doubtful Accounts $22,250.
• D)Debit Bad Debts Expense $7,350; credit Allowance for Doubtful Accounts $7,350.
• E)Debit Bad Debts Expense $21,000; credit Allowance for Doubtful Accounts $21,000.

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Definitions:

Social Resources

Assets within a society or community that individuals can draw upon for support, including social networks and institutions.

Achieving Goals

The process of defining, working towards, and ultimately reaching objectives or desired outcomes through various strategies and actions.

Availability of Resources

Availability of resources refers to the accessibility and abundance of necessary materials, finances, and other assets required by individuals or communities to function and thrive.

Immediate Gratification

The inclination towards seeking immediate satisfaction or gratification, preferring quick benefits instead of considering the long-term consequences.