A Company's Allowance for Doubtful Accounts Is $4,000 and $3,000

question 59

Multiple Choice

A company's allowance for doubtful accounts is $4,000 and $3,000 on 1/1/11 and 1/1/10, respectively. During 2010, bad debts expenses were estimated to be 6% on net credit sales of $100,000. During 2010, the amount of accounts written off as uncollectible amounts to

• A) $6,000.
• B) $7,000.
• C) $5,000.
• D) $4,000.

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Definitions:

Present Value

Present value is a financial concept that involves determining the current worth of a future sum of money or stream of cash flows given a specific rate of return.

Second Class of Stock

A category of shares that have different rights and privileges than the primary class of stock in a company, often with different voting or dividend rights.

Unequal Voting Rights

A situation where shares are divided into classes, each with varying degrees of voting power in the company's decisions.

Lower Priority

A status indicating that a task or obligation is considered less important or urgent compared to others and can be addressed or fulfilled later.