Using the Percentage of Receivables Method for Recording Bad Debt

question 32

Multiple Choice

Using the percentage of receivables method for recording bad debt expense, estimated uncollectible accounts are $14,000. If the balance of the Allowance for Doubtful Accounts is $2,000 debit before adjustment, what is the amount of bad debt expense?

• A) $2,000
• B) $12,000
• C) $14,000
• D) $16,000

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Definitions:

Variable Selling Expenses

Sales-related costs that vary directly with the volume of sales, such as commissions and shipping charges.

Contribution Approach

An income statement format that organizes costs by their behavior. Costs are separated into variable and fixed categories rather than being separated according to organizational functions.

Variable Administrative Expenses

Costs that fluctuate in relation to a company's activity levels, such as clerical support and utilities.

Maintenance Hours

The total number of hours dedicated to maintaining and repairing machinery, equipment, or property within a certain period.