Fresh Dairy Company Uses the Allowance Method and Estimates Uncollectible

question 92

Multiple Choice

Fresh Dairy Company uses the allowance method and estimates uncollectible accounts based on a percent of sales. Net credit sales represent 75% of total sales. Total sales for 2019 were $840,000. Historically, 1/2 of 1% of net credit sales have been uncollectible. At December 31, 2019, the balance in allowance for doubtful accounts is a $120 credit. What is the balance in bad-debt expense after the adjusting entry is made?

• A)$3,030
• B)$4,200
• C)$3,150
• D)$3,270

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Definitions:

Departmentalization

Process of dividing work activities into units within the organization.

Functional

relates to the specific roles and activities designed to achieve objectives within an organization, often grouped by department like marketing or finance.

Production

The process of creating, manufacturing, or producing goods and services.

Organization Chart

Visual representation of a firm’s structure that illustrates job positions and functions.