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:

Labor Force

The total number of people, including both employed and unemployed individuals, who are of working age and willing to work.

U.S. Population

The total number of people residing within the United States, a demographic figure that changes due to births, deaths, and migration.

Discouraged Workers

Individuals not currently looking for work because they believe no jobs are available for them.

Adult Population

Individuals within a specified area or country who are above the age at which one legally becomes an adult, often considered for labor force and demographic analyses.