Gross Accounts Receivable Is $10,000

question 92

Multiple Choice

Gross Accounts Receivable is $10,000.Allowance for Doubtful Accounts has a credit balance of $200.Net sales for the year are $150,000.In the past,2% of sales had proved uncollectible,and an aging of the receivables indicates $1,200 is doubtful.Under the balance sheet approach,Bad Debts Expense for the year is:

• A)$1,000.
• B)$3,000.
• C)$2,800.
• D)$1,200.

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Definitions:

Overhead Applied

The allocation of indirect costs, such as manufacturing overhead, to specific jobs or products based on a predetermined rate or method.

Activity-Based Costing

A cost allocation system that first identifies overhead expenses, assigns them to specific activities, and then distributes these costs to various products.

Traditional Costing Method

An accounting method that assigns indirect costs to products based on a predetermined overhead rate, often not reflecting the actual consumption of resources by each product.

Direct Labor-Hours

The total number of hours worked directly on the production of goods.