Ellen's Candies estimates that approximately $2.15 out of every $100 of credit sales proves to be uncollectible. Ellen's Candies calculates Bad Debts Expense using the:
A) balance sheet approach.
B) aging of Accounts Receivable approach.
C) direct write-off method.
D) income statement approach.

Question

Quizplus · Accepted Answer

Ellen's Candies is using the income statement approach to calculate Bad Debts Expense, as they estimate bad debts based on a percentage of credit sales, which is an income statement method.

Ellen's Candies Estimates That Approximately $2