At the Start of the Current Year, Minuteman Corporation Had

question 101

Multiple Choice

At the start of the current year, Minuteman Corporation had a credit balance in the Allowance for Impairment of $1,800. During the year a monthly provision of 2% of sales was made for uncollectible accounts. Sales for the year were $600,000, and $5,600 of accounts receivable were written off as worthless. No recoveries of accounts previously written off were made during the year. The year-end financial statements should show:

• A) Uncollectible accounts expense of $13,800.
• B) Allowance for Impairment with a credit balance of $8,200.
• C) Allowance for Impairment with a credit balance of $6,400.
• D) Uncollectible accounts expense of $5,600.

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Definitions:

Operating Expenses

Costs associated with the day-to-day operations of a business or organization.

Wholesale Price

The cost of goods sold in large quantities, usually to retailers rather than directly to consumers.

Mark-up on Cost

The percentage added to the cost price of goods to cover overhead and profit.

Lettuce

A leafy green vegetable commonly used in salads and sandwiches.