A company uses the percent of sales method to determine its bad debts expense.At the end of the current year,the company's unadjusted trial balance reported the following selected amounts: All sales are made on credit.Based on past experience,the company estimates 0.6% of credit sales 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 $2,130;credit Allowance for Doubtful Accounts $2,130.
B)Debit Bad Debts Expense $2,630;credit Allowance for Doubtful Accounts $2,630.
C)Debit Bad Debts Expense $4,300;credit Allowance for Doubtful Accounts $4,300.
D)Debit Bad Debts Expense $4,800;credit Allowance for Doubtful Accounts $4,800.
E)Debit Bad Debts Expense $5,300;credit Allowance for Doubtful Accounts $5,300.

Question

A company uses the percent of sales method to determine its bad debts expense.At the end of the current year,the company's unadjusted trial balance reported the following selected amounts:  All sales are made on credit.Based on past experience,the company estimates 0.6% of credit sales 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 $2,130;credit Allowance for Doubtful Accounts $2,130. 
B)Debit Bad Debts Expense $2,630;credit Allowance for Doubtful Accounts $2,630. 
C)Debit Bad Debts Expense $4,300;credit Allowance for Doubtful Accounts $4,300. 
D)Debit Bad Debts Expense $4,800;credit Allowance for Doubtful Accounts $4,800. 
E)Debit Bad Debts Expense $5,300;credit Allowance for Doubtful Accounts $5,300.

Quizplus · Accepted Answer

The Answer of A company uses the percent of sales method to determine its bad debts expense.At the end of the current year,the company's unadjusted trial balance reported the following selected amounts:  All sales are made on credit.Based on past experience,the company estimates 0.6% of credit sales 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 $2,130;credit Allowance for Doubtful Accounts $2,130. 
B)Debit Bad Debts Expense $2,630;credit Allowance for Doubtful Accounts $2,630. 
C)Debit Bad Debts Expense $4,300;credit Allowance for Doubtful Accounts $4,300. 
D)Debit Bad Debts Expense $4,800;credit Allowance for Doubtful Accounts $4,800. 
E)Debit Bad Debts Expense $5,300;credit Allowance for Doubtful Accounts $5,300.

A Company Uses the Percent of Sales Method to Determine