Craigmont Uses the Allowance Method to Account for Uncollectible Accounts

question 176

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 0.5% of sales, what is the amount of the bad debts expense adjusting entry?

• A) $5,290
• B) $4,625
• C) $4,750
• D) $4,825
• E) $3,960

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