A Company Uses the Percent of Sales Method to Determine

question 110

Multiple Choice

A company uses the percent of sales method to determine its bad debts expense.At the end of the current year,the company's unadjusted trial balance reported the following selected amounts:
All sales are made on credit.Based on past experience,the company estimates 0.6% of credit sales to be uncollectible.What amount should be debited to Bad Debts Expense when the year-end adjusting entry is prepared?

• A)$1,275
• B)$1,775
• C)$4,500
• D)$4,800
• E)$5,500

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Definitions:

Subdividing

The process of dividing land or property into smaller lots that can be sold separately.

Access

The means or opportunity to approach or enter a place or to obtain or make use of something.

Enforceable

Capable of being imposed or upheld by law.

Contracts

Contracts are legally binding agreements between two or more parties that outline terms and conditions and are enforceable by law.