Using the Percentage-Of-Sales Method, You Estimate That Total Uncollectible Accounts

question 43

Multiple Choice

Using the percentage-of-sales method, you estimate that total uncollectible accounts is $6,000. The Allowance for Uncollectible Accounts prior to adjustment has a credit balance of $2,000. The amount of the adjusting entry for uncollectible accounts expense is:

• A)$8,000.
• B)$6,000.
• C)$4,000.
• D)$2,000.

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Definitions:

Cost Of Merchandise

The purchase price of goods sold by a company, including the cost of acquiring the goods plus any additional expenses to bring them to saleable condition.

Freight In

The cost associated with transporting goods into a business, typically included in the cost of goods sold calculation.

Gross Profit

The financial gain obtained after subtracting the cost of goods sold from the revenue generated from sales.

Closing Entries

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent accounts, preparing the accounts for the next period.