Table 9-5
the Ritchie Company Gathered the Following Information Pertaining

question 7

Multiple Choice

Table 9-5
The Ritchie Company gathered the following information pertaining to its year ended December 31, 2019, prior to any adjustments:
$$\begin{array} { | l | r | r | } \hline \text { Net credit sales for the year } & \$ 780,000 & \\\hline \text { Accounts receivable, Dec. } 31,2019 & 170,000 & \\\hline \text { Allowance for doubtful accounts, } & & \\\text { December } 31,2019 & 3,200 & \mathrm { Cr } . \\\hline & & \\\hline\end{array}$$ Aging of accounts receivable at December 31, 2019:
$$\begin{array} { | l | r | } \hline 1 - 30 \text { days } & \$ 95,000 \\\hline 31 - 60 \text { days } & 38,000 \\\hline 61 - 90 \text { days } & 23,000 \\\hline \text { Over } 90 \text { days } & 14,000 \\\hline \text { Total } & \$ 170,000 \\\hline\end{array}$$
-Referring to Table 9-5, assume Ritchie uses the percent-of-sales method for estimating uncollectible accounts. Ritchie estimates that uncollectible accounts will be 1.75% of net credit sales. The adjusting entry to record bad-debt expense for the year is:

• A) \(\begin{array} { | c | r | r | }
• \hline \text { Bad-Debt Expense } & 13,650 & \\
• \hline \text { Accounts Receivable } & & 13,650 \\
• \hline
• \end{array}\)
• B) \(\begin{array} { | c | r | r | }
• \hline \text { Bad-Debt Expense } & 10,450 & \\
• \hline \text { Accounts Receivable } & & 10,450 \\
• \hline
• \end{array}\)
• C) \(\begin{array} { | c | r | r | }
• \hline \text { Bad-Debt Expense } & 16,850 & \\
• \hline \text { Allow. for Doubtful Accts. } & & 16,850 \\
• \hline
• \end{array}\)
• D) \(\begin{array} { | c | r | r | }
• \hline \text { Bad-Debt Expense } & 13,650 & \\
• \hline \text { Allow. for Doubtful Accts. } & & 13,650 \\
• \hline
• \end{array}\)

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