Craigmont Uses the Allowance Method to Account for Uncollectible Accounts

question 77

Multiple Choice

Craigmont uses the allowance method to account for uncollectible accounts.Its year-end unadjusted trial balance shows Accounts Receivable of $104,500,allowance for doubtful accounts of $665 (credit) and sales of $925,000.If uncollectible accounts are estimated to be 0.5% of sales,what is the amount of the bad debts expense adjusting entry?

• A)$4,625
• B)$3,960
• C)$5,290
• D)$4,750
• E)$4,825

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Definitions:

Intangible Assets

Assets that cannot be physically touched or seen but have value, such as patents, trademarks, and copyrights.

Economic Benefit

The gain received by an individual or a business from an economic transaction, including tangible and intangible gains.

Identifiable

Able to be recognized or distinguished as separate and distinct from others, often used in contexts like assets recognition in accounting.

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An understanding of the dynamics of a specific market, including competitors, customer behavior, and market trends.