Teeming Company Uses the Allowance Method of Accounting for Bad

question 38

Multiple Choice

Teeming Company uses the allowance method of accounting for bad debts.The following summary schedule was prepared from an aging of accounts receivable outstanding on December 31 of the current year.
The following additional information is available for the current year:

-See Teeming Company information above.If Teeming determines bad debt expense using 1.5 percent of net credit sales,the net realizable value of accounts receivable on the December 31 balance sheet will be

• A) $738,000.
• B) $740,000.
• C) $744,000.
• D) $750,000.

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Definitions:

Credit Card Sales

Transactions in which customers use credit cards to pay for goods or services, creating a receivable for the seller until payment is processed by the card issuer.

Summary Journal Entry

A consolidated record that summarizes multiple transactions into a single entry within the accounting records.

Accounts Receivable

Money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.

Sales Returns

Transactions where customers return previously purchased merchandise, leading to a reduction in sales revenue.