19-23 True or False

A company borrowed $16,000 by signing a 4 -month promissory note at 12% interest. The amount of interest to be paid at maturity is $640. True ur falso When using the allowance method of eccounting for uncollectible accounts, the entry to record the estirnated bad debts expense is a debit to Bad Debts xpense and a credit to Allowance for Doubtful Accounts. The percent of sales method for estimating bad debts uses only income statement account balances to estimate bod debts. company has $90,000 in outstanding eccounts receivable and it uses the allowance method to account for uncollectible accounts. Experience. uggests that 6% of outstanding receivables are uncollectible. The current debit bolance (before adjustments) in the allowance for doubtful accounts is 1200. The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for $6,000. A company using the percentage of sales method for estimating bad debts has sales of $350,000 and estimates that 10% of its sales are uncoliectible. The estimated amount of bod debts expense is $3,500