At the Beginning of 2015, Peter Dots Has the Following

question 58

Multiple Choice

At the beginning of 2015, Peter Dots has the following ledger balances: During the year, credit sales amounted to $800,000. Cash collected on credit sales amounted to $760,000 and $18,000 has been written off. At the end of the year, company adjusted for bad debts expense using the aging method. The amount estimated as uncollectible was $25,000.
-Refer to the table above,The ending balance in Bad Debts Expense would be:

• A) $38,000.
• B) $25,000.
• C) $13,000.
• D) $7,000.

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Definitions:

Allocation Base

A criterion or standard used to distribute indirect costs to various cost objects, such as products, services, or departments.

Plantwide Overhead Rate

A single overhead rate applied uniformly to all cost objects throughout an entire plant or facility.

GAAP

Generally Accepted Accounting Principles; a collection of commonly-followed accounting rules and standards for financial reporting.

ABC

Activity-Based Costing, an accounting method that assigns costs to products and services based on the resources they consume.