A Newly Created Design Business Called Smart Art Is Just

question 12

Essay

A newly created design business called Smart Art is just finishing up its first year of operations. During the year, there were credit sales of $40,000 and collections of $36,000. One account for $650 was written off. Smart Art uses the percent-of-sales method to account for uncollectible account expense, and has decided to use a factor of 2% for their year-end adjustment of uncollectible account expense. Show the journal entry required to record Uncollectible account expense at the end of the year.

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Definitions:

Foreign Firm

A company that is based in one country but operates or has offices in other countries.

Local Firm

A business establishment that operates in a specific geographical area, typically offering products or services to a local market or community.

International Marketplace

A global economic environment where goods, services, and capital move across borders, allowing for the exchange and consumption beyond local and national markets.

Capital

Refers to wealth in the form of money or other assets owned by a person or organization or available for a purpose such as starting a company or investing.