A Company Has Net Sales of $50,000 During the Year

question 1

Multiple Choice

A company has net sales of $50,000 during the year.At year end (before an adjustment is made) ,Allowance for Uncollectible Accounts has a credit balance of $2,500.If the company estimates that 3 percent of net sales are uncollectible,what is the balance in the allowance account after the year-end adjustment has been made using the percentage of net sales method?

• A)$1,500 debit balance
• B)$1,500 credit balance
• C)$4,000 credit balance
• D)$1,000 debit balance

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Definitions:

Third Parties

Third parties refer to individuals or entities that are not directly involved in a transaction or agreement but may be indirectly affected or have an interest in it.

Main Source

is the primary origin or initial supplier of information, goods, or services.

Revenue

The total amount of income generated by the sale of goods or services related to a company's primary operations.

Federal Government

The national government of a federal state, which operates in conjunction with regional governments.