The Following Selected Amounts Are Reported on the Year-End Unadjusted

question 46

Multiple Choice

The following selected amounts are reported on the year-end unadjusted trial balance report for a company that uses the percent of sales method to determine its bad debts expense. All sales are made on credit. Based on past experience, the company estimates 1% of credit sales to be uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

• A)Debit Bad Debts Expense $19,750; credit Allowance for Doubtful Accounts $19,750.
• B)Debit Bad Debts Expense $15,225; credit Allowance for Doubtful Accounts $15,225.
• C)Debit Bad Debts Expense $22,250; credit Allowance for Doubtful Accounts $22,250.
• D)Debit Bad Debts Expense $7,350; credit Allowance for Doubtful Accounts $7,350.
• E)Debit Bad Debts Expense $21,000; credit Allowance for Doubtful Accounts $21,000.

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Definitions:

Unrehearsed Information

Information that has not been actively reviewed or practiced, often leading to its being forgotten or not well-integrated into memory.

Short-Term Memory

The capacity for holding a small amount of information in mind in an active, readily available state for a short period of time.

Rehearsed Information

Information that has been consciously reviewed multiple times in order to enhance memory retention and recall.

Preserving Information

The process of maintaining or keeping information intact and accessible over time.