Portia Incorporated Uses the Percent-Of-Sales Method to Estimate Uncollectibles

question 107

Multiple Choice

Portia Incorporated uses the percent-of-sales method to estimate uncollectibles. Net credit sales for the current year amount to $2,000,000, and management estimates 2% will be uncollectible. Allowance for Uncollectible Accounts prior to adjustment has a debit balance of $1,900. The amount of expense reported on the income statement and the balance in Allowance for Uncollectible Accounts, respectively, will be:

• A) $41,900 and $40,000.
• B) $40,000 and $38,100.
• C) $38,100 and 40,000.
• D) $40,000 and $41,900.