The Allowance for Uncollectible Accounts Currently Has a Debit Balance

question 148

Multiple Choice

The Allowance for uncollectible accounts currently has a debit balance of $200.The company's management estimates that 2.5% of net credit sales will be uncollectible.Net credit sales are $115,000.What will be the amount of Uncollectible accounts expense reported on the income statement?

• A) $2,675
• B) $2,875
• C) $3,275
• D) $3,075

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Definitions:

Coupon Bond

A debt security issued by corporations or governments that pays periodic interest payments based on a fixed interest rate until the bond reaches its maturity date, at which point the principal is repaid.

Par Value

The face value of a bond or stock as stated by the issuing company, which does not necessarily match the market value.

Yield To Maturity

The total return anticipated on a bond if the bond is held until its maturity date, accounting for its current market price, face value, interest rate, and time to maturity.

Intrinsic Value

The inherent worth of an asset, determined based on underlying perceptions of its true value rather than its current market price.