A Company Uses the Percent of Receivables Method to Determine

question 42

Multiple Choice

A company uses the percent of receivables 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 3.5% of credit sales to be uncollectible.What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

• A)Debit Bad Debts Expense $13,975; credit Allowance for Doubtful Accounts $13,975.
• B)Debit Bad Debts Expense $15,225; credit Allowance for Doubtful Accounts $15,225.
• C)Debit Bad Debts Expense $16,475; credit Allowance for Doubtful Accounts $16,475.
• D)Debit Bad Debts Expense $7,350; credit Allowance for Doubtful Accounts $7,350.
• E)Debit Bad Debts Expense $17,350; credit Allowance for Doubtful Accounts $17,350.

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