Craigmont Uses the Allowance Method to Account for Uncollectible Accounts

question 176

Multiple Choice

Craigmont uses the allowance method to account for uncollectible accounts. Its year-end unadjusted trial balance shows Accounts Receivable of $104,500, allowance for doubtful accounts of $665 (credit) and sales of $925,000. If uncollectible accounts are estimated to be 0.5% of sales, what is the amount of the bad debts expense adjusting entry?

• A) $5,290
• B) $4,625
• C) $4,750
• D) $4,825
• E) $3,960

---

Definitions:

Endorphins

Naturally occurring chemicals in the brain that reduce pain and boost pleasure, resulting in feelings of well-being.

Chemical Structures

The three-dimensional arrangement of atoms in a molecule, which determines its reactivity and properties.

GABA

Gamma-Aminobutyric Acid (GABA) is a neurotransmitter in the brain that plays a key role in regulating nerve cell activity and is involved in reducing neuronal excitability throughout the nervous system.

Inhibitory Neurotransmitter

A type of neurotransmitter that decreases the likelihood that the neuron it acts upon will fire an action potential.