Darby Uses the Allowance Method to Account for Uncollectible Accounts

question 132

Multiple Choice

Darby 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 4% of accounts receivable, what is the amount of the bad debts expense adjusting entry?

• A) $4,845
• B) $4,180
• C) $3,515
• D) $3,700
• E) $3,850

---

Definitions:

Value Chain

A series of activities that a company performs to create value for its customers, from product design to post-sale service.

Location Economies

The cost advantages gained by a business due to its geographical position, often influencing its competitiveness.

Meganational Strategy

A business strategy that emphasizes operating and competing in multiple countries as one global market.

Avoids Adaptation

a strategy where a business does not significantly alter its product or services to accommodate different cultural or market requirements in its expansion or operations.