The Allowance for Uncollectible Accounts Currently Has a Debit Balance

question 118

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 balance of the Allowance for uncollectible accounts reported on the balance sheet?

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

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Definitions:

Leading Economic Indicator

A statistic that predicts future economic activity and trends before they occur, such as the stock market or job applications.

Money Supply

The total amount of monetary assets available in an economy at a specific time, including cash, coins, and balances held in checking and savings accounts.

Inflation

Inflation denotes the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.

Capacity Utilization

A measure of how effectively an entity uses its production capacity to produce goods, expressed as a percentage of total potential output.