The Following Information Is from the 2019 Records of Uptown

question 13

Multiple Choice

The following information is from the 2019 records of Uptown Antique Shop: $$\begin{array} { | l | r | } \hline \begin{array} { l } \text { Accounts receivable, December 31, 2019 } \\\text { Allowance for Bad Debts, December 31,2019 } \\\text { prior to adjustment }\end{array} & 1,500 \text { (debit) } \\\hline \text { Net credit sales for 2019 } & 180,000 \\\hline \begin{array} { l } \text { Accounts written off as uncollectible during } \\2019\end{array} & 11,000 \\\hline \text { Cash sales during 2019 } & 28,000 \\\hline\end{array}$$ Bad debts expense is estimated by the percent-of-sales method. Management estimates that 3% of net credit sales will be uncollectible. The ending balance of the Allowance for Bad Debts account after adjustment will be ________.

• A) $6,900
• B) $4,740
• C) $7,740
• D) $3,900

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Definitions:

Fire Prevention Program

A fire prevention program includes strategies and activities aimed at reducing the incidence and severity of uncontrolled fires.

Insurer

A company or entity that provides coverage, typically in the form of compensation resulting from loss, damage, illness, or death, in exchange for premium payments.

Principal-Agent Problem

A situation in which there is a conflict of interest between a principal (such as an owner or shareholder) and an agent (such as a manager or employee) because the agent is motivated to act in their own best interests rather than those of the principal.

Effort and Output

The relationship between the level of effort applied by workers and the quantity of output produced as a result.