Livelink Incorporated Use the Percentage-Of-Sales Method to Estimate Uncollectible Receivables

question 107

Multiple Choice

Livelink Incorporated use the percentage-of-sales method to estimate uncollectible receivables. Net credit sales for the current year amount to $1,000,000 and management estimates 3% will be uncollectible. Allowance for Doubtful Accounts prior to adjustment has a debit balance of $1,900. The amount of expense reported on the income statement will be:

• A) $31,900
• B) $30,000
• C) $28,100
• D) $1,900

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Definitions:

Per Capita Rate

A statistical measure that expresses the quantity of something per individual person within a population or area.

Spawn

The process by which many aquatic animals release or deposit eggs into water.

Die-off

A sharp reduction in the population of a species due to environmental events or human actions.

Optimal Population Growth

Optimal population growth refers to the most favorable growth rate for a population that allows it to increase in size while maintaining a balance with the carrying capacity of its environment.