At January 1,Davidson Services Has the Following Balances: During

question 139

Multiple Choice

At January 1,Davidson Services has the following balances: During the year,Davidson has $104,000 of credit sales,collections of $100,000,and write-offs of $1,400. Davidson records Uncollectible account expense at the end of the year using the percent-of-sales method,and applies a rate of 1.1%,based on past history.
-
Prior to the year-end entry to adjust the Uncollectible accounts expense,what is the balance in the Allowance for uncollectible accounts?

• A) Debit of $1,400
• B) Credit of $800
• C) Debit of $600
• D) Credit of $2,200

---

Definitions:

Capital Investment

Funds invested in a business by owners for use in further production or expansion activities.

Qualitative Characteristic

A feature that allows users to assess and compare the financial position, performance, and changes in financial position of an entity, emphasizing non-quantifiable information.

Present Value Analysis

A financial calculation that determines the current worth of a future sum of money or stream of cash flows given a specified rate of return.

Capital Investment

The spending of money to purchase assets or property intended to create growth or profit for a business.