The Following Information Is from the 2013 Records of Armadillo

question 76

Multiple Choice

The following information is from the 2013 records of Armadillo Camera Shop: Uncollectible accounts expense is estimated by the percent-of-sales method. Management estimates that 3% of net credit sales will be uncollectible. Which of the following will be the amount of Uncollectible accounts expense?

• A)$7,000
• B)$3,450
• C)$2,250
• D)$2,850

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Definitions:

Direct Method

A cash flow statement preparation method that lists major classes of gross cash receipts and payments.

Cash Receipts

The money received by a business from transactions, including sales, debt collections, and other cash inflows.

Cash Payments

Cash payments refer to transactions in which money is exchanged immediately for goods or services, without the use of credit.

Accounts Payable

Liabilities or money owed by a company to its creditors or suppliers for goods and services received but not yet paid for.