A customer charges a treadmill at Annie's Sport Shop. The price is $4,000 and the financing charge is 6% per annum if the bill is not paid in 30 days. The customer fails to pay the bill within 30 days and a finance charge is added to the customer's account. What is the amount of the finance charge? a. $8 b. $20 c. $80 d. $240 The receivable that is usually evidenced by a formal instrument of credit a(n) a. Trade receivable. b. Note receivable. c. Accounts receivable. d. Income tax receivable The percentage of sales basis of estimating expected uncollectibles a. Emphasizes the matching of expenses with revenues. b. Emphasized balance sheet relationships. c. emphasizes cash realizable value. d. Is not generally accepted as a basis for estimating bad debts. A debit balance in the Allowance for Doubtful Accounts a. Is the normal balance for that account b. Indicates that actual bad debt write-offs have exceeded previous provisions for bad debts. c. Indicates that actual bad debt write-offs have been less than what was estimated d. Cannot occur if the percentage of sales method of estimating bad debts is used. Two bases for estimating uncollectible accounts are: a. Percentage of assets and percentage of sales. b. Percentage of receivables and percentage of total revenue. c. Percentage of current assets and percentage of sales. d. Percentage of receivables and percentage of sales. Haven Company uses the percentage of sales method for recording bad debts expense. For the year, cash sales are $600,000 and credit sales are $2, 700,000. Management estimates that 1% is the sales percentage to use. What adjusting entry will Haven Company make to record the bad debts expense? a. Bad Debt Expense 33,000 Allowance for Doubtful Accounts 33,000 b. Bad Debt Expense 27,000 Allowance for Doubtful Accounts 27,000 c. Bad Debt Expense 27,000 Accounts Receivable 27,000 d. Bad Debt Expense 33,000 Accounts Receivable 33,000