Abbott Company Uses the Allowance Method of Accounting for Uncollectible

question 106

Multiple Choice

Abbott Company uses the allowance method of accounting for uncollectible accounts. Abbott estimates that 3% of credit sales will be uncollectible. On January 1, Allowance for Doubtful Accounts had a credit balance of $2,400. During the year, Abbott wrote off accounts receivable totaling $1,800 and made credit sales of $100,000. There were no sales returns during the year. After the adjusting entry, the December 31 balance in Bad Debt Expense will be

• A) $1,200
• B) $3,000
• C) $3,600
• D) $7,200