Using the Income Statement Approach for Accounting for Uncollectible Accounts,a

question 10

Multiple Choice

Using the income statement approach for accounting for uncollectible accounts,a company estimates that 2.5% of credit sales will eventually become uncollectible.If credit sales during the year are $400,000 and accounts receivable at the end of the year are $80,000,the adjustment for estimated uncollectible accounts will require a:

• A)Credit to Accounts Receivable for $2,000.
• B)Debit to Bad Debt Expense for $10,000.
• C)Debit to Allowance for Uncollectible Accounts for $10,000.

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Definitions:

Voluntary Benefit

Optional, employee-paid benefits offered by employers, allowing employees to tailor benefits packages to their needs.

Child Care Allowance

Financial support provided by an employer or government to help offset the costs of child care for employees or citizens.

Pensions and Savings Plans

Retirement benefit plans sponsored by employers to provide employees with financial security in their retirement years.

Legally Required Benefit

Employee benefits that employers are mandated to provide by law, such as social security, workers' compensation, and unemployment insurance.