Valdez Company Uses the Percent of Receivables Method to Estimate

question 92

Multiple Choice

Valdez Company uses the percent of receivables method to estimate uncollectible accounts expense. Valdez began 2013 with balances in Accounts Receivable and Allowance for Doubtful Accounts of $38,250 and $2,900, respectively. During the year, the company wrote off $2,320 in uncollectible accounts. In preparation for the company's 2013 estimate, Valdez prepared the following aging schedule: What will Valdez record as Uncollectible Accounts Expense for 2013?

• A)$3,646
• B)$746
• C)$3,066
• D)$2,320

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Definitions:

GICs

Guaranteed Investment Certificates are a form of investment in Canada that ensures a fixed rate of return for a specific duration.

Simple Interest

Interest calculated on the principal amount of a loan or deposit, not including any previously earned interest.

Financial Position

Represents the net worth of an entity, detailing assets, liabilities, and shareholders' equity at a specific point in time.

Assignable Loan Contract

A loan agreement that allows the lender to transfer or assign the loan to another party.