A Company Uses the Percent of Sales Method to Determine

question 44

Multiple Choice

A company uses the percent of sales method to determine its bad debts expense.At the end of the current year,the company's unadjusted trial balance reported the following selected amounts: All sales are made on credit.Based on past experience,the company estimates that 0.6% of net credit sales are uncollectible.What amount should be debited to Bad Debts Expense when the year-end adjusting entry is prepared?

• A)$1,275
• B)$1,775
• C)$4,500
• D)$4,800
• E)$5,500

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Definitions:

National Center for Health Statistics

A U.S. government agency that compiles statistical information to guide actions and policies to improve the health of the American people.

Standard Deviation

A figure representing how much the data in a set deviates from its central value, the mean.

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National Weather Service

A United States federal agency tasked with providing weather forecasts, warnings of hazardous weather, and other weather-related products to organizations and the public.