On Average, 5% of Total Accounts Receivable Has Been Uncollectible

question 18

Multiple Choice

On average, 5% of total accounts receivable has been uncollectible in the past. At the end of the year, the balance of accounts receivable is $100,000 and the allowance for doubtful accounts has an unadjusted credit balance of $500. Credit sales during the year were $150,000. Using the aging of accounts receivable method, the estimated bad debt expense would be:

• A) $4,500.
• B) $5,000.
• C) $5,500.
• D) $7,500.

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Definitions:

Red

A primary color at the longer-wavelength end of the spectrum.

Probability Calculus

A field of mathematics focused on determining the probability of different results.

Disjunction

Disjunction is a logical operation that results in true if at least one of the operands is true; in propositional logic, it's represented by the OR operator.

Event

An occurrence or happening, especially one of significance, that can be observed or participated in.