The Allowance for Uncollectible Accounts Currently Has a Debit Balance

question 148

Multiple Choice

The Allowance for uncollectible accounts currently has a debit balance of $200.The company's management estimates that 2.5% of net credit sales will be uncollectible.Net credit sales are $115,000.What will be the amount of Uncollectible accounts expense reported on the income statement?

• A) $2,675
• B) $2,875
• C) $3,275
• D) $3,075

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Definitions:

Trading Partner

A trading partner is an entity such as a company, organization, or government with which another entity engages in the exchange of goods, services, or information.

Average Variable Costs

The total variable costs (costs that change with production volume) divided by the quantity of output produced.

Average Costs

This reflects the cost for each unit, calculated by dividing the overall cost of production by the total units created.

Shutting-Down

The process a business undertakes to cease operations, often due to financial problems or a strategic decision.