Nolan Company Had Total Credit Sales for the Past Year $\begin{array}{lcc}\text { Bad Debts Expense } & 14,380 & \\\quad \text { Accounts Receivable } && 14,380 \\\end{array}$

question 2

Multiple Choice

Nolan Company had total credit sales for the past year of $800,000.As of year-end,but before estimating bad debts,the company had a $70,000 debit balance in accounts receivable and a $600 debit balance in the Allowance for Uncollectible Accounts.Upon examination of the accounts receivable,it was found that 55% of the balance was 1-30 days old,30% was 31-60 days old,9% were 61-90 days old,and 6% were over 90 days old.Nolan Company estimates the following bad debts percentages: 1-30 days 10%
31-60 days 25%
61-90 days 40%
Over 90 days 80%
Which of the following is the journal entry necessary to estimate bad debts using the aging method?

• A)\(\begin{array}{lcc}
• \text { Bad Debts Expense } & 14,380 & \\
• \quad \text { Accounts Receivable } && 14,380 \\
• \end{array}\)
• B)\(\begin{array}{lccc}
• \text { Bad Debts Expense } & 14,380 & \\
• \quad \text { Allowance for Uncollectible Accounts } && 14,380 \\
• \end{array}\)
• C)\(\begin{array}{lccc}
• \text { Bad Debts Expense } & 14,980 & \\
• \quad \text { Allowance for Uncollectible Accounts } & & 14,980 \\
• \end{array}\)
• D)\(\begin{array}{lccc}
• \text { Bad Debts Expense } & 15,580 & \\
• \quad \text { Allowance for Uncollectible Accounts } & & 15,580 \\
• \end{array}\)
• E) \(\begin{array}{lccc}
• \text { Bad Debts Expense } & 16,180 & \\
• \quad \text { Allowance for Uncollectible Accounts } & & 16,180
• \end{array}\)

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Definitions:

Test Statistic

A statistic whose value helps determine whether a null hypothesis should be rejected.

Parameter

A numerical characteristic of a population, such as a population mean m, a population standard deviation s, a population proportion p, and so on.

Adjusted Multiple Coefficient

A measure in statistics used to determine the goodness of fit of a model, adjusted for the number of predictors in the model.

SSE

Sum of Squared Errors, a measure used in statistical data analysis to represent the discrepancy between the data and an estimation model.