Craigmont Uses the Allowance Method to Account for Uncollectible Accounts

question 217

Multiple Choice

Craigmont uses the allowance method to account for uncollectible accounts. Its year-end unadjusted trial balance shows Accounts Receivable of $104,500, allowance for doubtful accounts of $665 (credit) and sales of $925,000. If uncollectible accounts are estimated to be 4% of accounts receivable, what is the amount of the bad debts expense adjusting entry?

• A) $4,845
• B) $3,700
• C) $3,515
• D) $4,180
• E) $3,850

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