Question
The unadjusted trial balance at year-end for a company that uses the percent of receivables method to determine its bad debts expense reports the following
The unadjusted trial balance at year-end for a company that uses the percent of receivables method to determine its bad debts expense reports the following selected amounts:
Accounts receivable | $ 441,000 Debit |
Allowance for Doubtful Accounts | 1,310 Debit |
Net Sales | 2,160,000 Credit |
All sales are made on credit. Based on past experience, the company estimates 2.5% of ending account receivable to be uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense? |
a.
Debit Bad Debts Expense $11,025; credit Allowance for Doubtful Accounts $11,025.
b.
Debit Bad Debts Expense $9,715; credit Allowance for Doubtful Accounts $9,715.
c.
Debit Bad Debts Expense $12,335; credit Allowance for Doubtful Accounts $12,335.
d.
Debit Bad Debts Expense $5,400; credit Allowance for Doubtful Accounts $5,400.
e.
Debit Bad Debts Expense $15,400; credit Allowance for Doubtful Accounts $15,400.
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