The Following Information Is Related to December 31, 2021 Balances

question 176

Multiple Choice

The following information is related to December 31, 2021 balances. During 2022, sales on account were $870,000 and collections on account were $516,000.The company wrote off $48,000 in uncollectible accounts.An analysis of outstanding receivable accounts at year-end indicated that bad debts should be estimated at $324,000.Bad debt expense for 2022 is

• A)$102,000.
• B)$ 54,000.
• C)$324,000.
• D)$ 6,000.

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Definitions:

Conversion Costs

The expenses specifically associated with converting raw materials into finished goods, including labor and overhead costs.

First-In, First-Out

A method for managing inventories and accounting, assuming that the earliest goods purchased are the first to be sold or used.

Inventory Costing

Methods used to value and account for inventory, including Specific Identification, FIFO (First-In, First-Out), LIFO (Last-In, First-Out), and Weighted Average.

Conversion Costs

The sum of direct labor and manufacturing overhead costs, representing the costs incurred to convert raw materials into finished products.