At the End of the Year,Smith Company Has the Following

question 181

Multiple Choice

At the end of the year,Smith Company has the following information available: The company uses the percent-of-sales method to estimate bad debts and has not prepared the adjusting journal entry for Uncollectible-Account Expense at year end.In the prior year,uncollectible accounts were estimated at 1% of credit sales.What should the company do for uncollectible accounts at the end of the current year?

• A)increase the percentage in the percent-of-sales method
• B)reexamine credit policies
• C)change to the direct write-off method
• D)A and B

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