Question
In 20X5, Soren Enterprises had total sales of $450,000,000, of which 80% were on credit. During the year, $300,000,000 cash was collected on credit sales.
In 20X5, Soren Enterprises had total sales of $450,000,000, of which 80% were on credit. During the year, $300,000,000 cash was collected on credit sales. The beginning balance in Accounts Receivable (on January 1 of Year 1) was $65,000,000. The beginning balance in the Allowance for Doubtful Accounts (on January 1 of Year 1) was $20,000,000. The amount of accounts written off as uncollectible during the year was $15,000,000. -- Management uses the percentage of credit sales method and estimates that 4% of credit sales will ultimately be uncollectible. Which ONE of the following is included in the summary journal entry necessary during the year to record the write off of the $15,000,000 in verified uncollectible accounts?
CREDIT to Bad Debt Expense for $15,000,000 | ||
DEBIT to Cash for $15,000,000 | ||
DEBIT to Accounts Receivable for $15,000,000 | ||
DEBIT to Allowance for Doubtful Accounts for $15,000,000 | ||
CREDIT to Cash for $15,000,000 | ||
DEBIT to Bad Debt Expense for $15,000,000 |
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