JR Corporation Has a Debit Balance of $3,750 in Allowance

question 77

Multiple Choice

JR Corporation has a debit balance of $3,750 in Allowance for Bad Debts. If it estimates that 2 percent of the net sales of $1,500,000 will be uncollectible, it should debit

• A) Allowance for Bad Debts for $30,000
• B) Allowance for Bad Debts for $33,750
• C) Bad Debt Expense for $33,750
• D) Bad Debt Expense for $30,000

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Definitions:

Accounts Payable

The amount of money a company owes to its creditors for goods or services purchased on credit.

Income Statement

A financial report that shows a company's revenue, expenses, and profit over a specific time period.

Accounts Receivable

Funds that customers owe to a company for products or services already provided but not yet compensated.

Sales Revenue

The total income received by a company from its sales of goods or services, before any expenses are subtracted.