Abbott Company Uses the Allowance Method of Accounting for Uncollectible

question 115

Multiple Choice

Abbott Company uses the allowance method of accounting for uncollectible accounts. Abbott estimates that 3% of net credit sales will be uncollectible. On January 1, 2010, the Allowance for Doubtful Accounts had a credit balance of $2,400. During 2010, Abbott wrote-off accounts receivable totaling $1,800 and made credit sales of $100,000. There were no Sales Returns or Sales Discounts during the year. After the adjusting entry, the December 31, 2010, balance in the Bad Debt Expense would be

• A) $1,200
• B) $3,000
• C) $3,600
• D) $7,200

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Definitions:

Orphanages

Residential institutions dedicated to the care of children whose parents are deceased or otherwise unable or unwilling to care for them.

Permissive

Pertaining to a parenting or therapeutic style that allows and accepts behavior without strict control or limits.

Little Control

The perception or reality of having minimal influence over situations or outcomes.

Young Children

A demographic group typically defined as individuals from infancy through early childhood, characterized by rapid physical and cognitive development.