Portia Incorporated Uses the Percent-Of-Sales Method to Estimate Uncollectibles

question 107

Multiple Choice

Portia Incorporated uses the percent-of-sales method to estimate uncollectibles. Net credit sales for the current year amount to $2,000,000, and management estimates 2% will be uncollectible. Allowance for Uncollectible Accounts prior to adjustment has a debit balance of $1,900. The amount of expense reported on the income statement and the balance in Allowance for Uncollectible Accounts, respectively, will be:

• A) $41,900 and $40,000.
• B) $40,000 and $38,100.
• C) $38,100 and 40,000.
• D) $40,000 and $41,900.

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Definitions:

Histograms

A graphical representation that organizes a group of data points into user-specified ranges.

Leaf

In the context of a tree data structure, a leaf is a node that has no children.

Stem

In the context of data visualization, the stem represents the main part of a stem-and-leaf plot, displaying digits for significant value while the leaf displays less significant digits.

Split the Stems

A technique used in stem-and-leaf plots to spread out the data more evenly across the plot by splitting the stems to create more intervals.