At Year End,MWE Graphics Has a $700 Debit Balance in Allowance

question 20

Essay

At year end,MWE Graphics has a $700 debit balance in Allowance for Uncollectible Accounts.It estimates that 5 percent of the $40,000 in sales are uncollectible.Give the amount that should be used in the adjusting entry to record uncollectible accounts using the percentage of net sales method.(Show your calculations. )

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Definitions:

Useful Life

The estimated duration a fixed asset is expected to be economically useful to an organization.

Capitalized

Refers to recording an expense or cost as an asset on the balance sheet, rather than as an expense on the income statement, to spread out the expense over its useful life.

Long-Lived Assets

These are tangible or intangible assets that a company expects to use for more than one year, including property, plant, and equipment.

Economic Benefits

The gains derived from actions or decisions, typically measured in terms of revenue or income generated or costs saved.