AT&U Company
Data for the Year Ended December 31, Year

question 115

Multiple Choice

AT&U Company
Data for the year ended December 31, Year 1, are presented below:
$\begin{array}{llr} \text { Sales (credit) } &\$2,500,000\\ \text { Sales returns and allowances } &50,000\\ \text { Accounts receivable (December 31, Year 1) } &640,000\\ \text { Allowance for doubtful accounts} &\\ \text { (before adjustment at December 31, Year 1) } &20,000\\ \text {Estimated amount of uncollected accounts based on aging analysis } &45,000\\\end{array}$

-Refer to the figure AT&U Company.If the company estimates its bad debts at 1% of net credit sales,what amount will be reported as bad debt expense for Year 1?

• A) $4,500
• B) $24,500
• C) $25,000
• D) $44,500

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Definitions:

Specific Legacy

A bequest in a will that leaves a particular piece of property or a specific asset to a designated beneficiary.

Probate Laws

The legal process through which a deceased person's estate is valued, beneficiaries are determined, and assets are distributed according to the deceased's will or state law.

Remaining Principal

The amount of the original loan or mortgage that has not yet been repaid.

Wal-Mart Stores

A multinational retail corporation operating a chain of hypermarkets, discount department stores, and grocery stores, headquartered in Bentonville, Arkansas.