The Following Information Pertains to Lightning,Inc Lightning Uses the Percentage-Of-Credit-Sales Method and Estimates 1% of Sales

question 40

Multiple Choice

The following information pertains to Lightning,Inc.at the end of the year:
$$\begin{array} { l r r } \text { Credit Sales } & \$ 60,000 \\\text { Accounts Payable } & 10,000 & \\\text { Accounts Receivable } & 7,000 & \\\text { Allowance for Uncollectible Accounts } & 400 & \text { credit } \\\text { Cash Sales } & 20,000 &\end{array}$$
Lightning uses the percentage-of-credit-sales method and estimates 1% of sales are uncollectible.What is the ending balance of the allowance account after the year-end adjustment?

• A)$600.
• B)$1,000.
• C)$200.
• D)$1,200.

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Definitions:

Adrenal Medulla

The inner part of the adrenal glands that produces adrenaline and noradrenaline, hormones involved in the body's stress response.

Pineal Gland

A small endocrine gland in the brain that produces the hormone melatonin, which regulates sleep patterns.

Prolactin

A hormone produced by the anterior pituitary gland that stimulates milk production in mammals.

Pituitary Gland

A small, pea-sized gland located at the base of the brain, critical in controlling growth, metabolism, and reproductive functions.