The Following Information Is from the 2019 Records of Uptown

question 149

Multiple Choice

The following information is from the 2019 records of Uptown Antique Shop: $$\begin{array} { | l | l | } \hline \text { Accounts receivable, December 31, 2019 } & \$ 44,000 \text { (debit) } \\\hline \text { Allowance for Bad Debts, December 31,2019 prior to adjustment } & 1500 \text { (debit) } \\\hline \text { Net credit sales for 2019 } & 180,000 \\\hline \text { Accounts written off as uncollectible during 2019 } & 13,000 \\\hline \text { Cash sales during 2019 } & 27,000 \\\hline\end{array}$$ Bad debts expense is estimated by the percent-of-sales method.Management estimates that 4% of net credit sales will be uncollectible.The ending balance of the Allowance for Bad Debts account after adjustment will be ________.

• A) $8700
• B) $6780
• C) $9780
• D) $5700

Comprehend the options and implications of the fair value measurement for financial instruments.

Discern the conditions under which a company can record interest income on long-term credit sales.

Understand the concept and financial reporting requirements of securitization entities.

Recognize the accounting treatment for sales of receivables with and without recourse.

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Definitions:

Spending Variance

The difference between the actual amount of money spent and the budgeted or planned amount of expenditure.

Cost Formula

An equation used to predict the total cost of production, combining both fixed and variable costs, based on the level of activity or volume.

Indirect Materials

Small items of material such as glue and nails that may be an integral part of a finished product, but whose costs cannot be easily or conveniently traced to it.

Variable Cost

is a cost that varies with the level of output or activity, such as raw materials or piece-rate labor.