A company uses the percent of receivables 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 3.5% 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 $13,975; credit Allowance for Doubtful Accounts $13,975.
B)Debit Bad Debts Expense $15,225; credit Allowance for Doubtful Accounts $15,225.
C)Debit Bad Debts Expense $16,475; credit Allowance for Doubtful Accounts $16,475.
D)Debit Bad Debts Expense $7,350; credit Allowance for Doubtful Accounts $7,350.
E)Debit Bad Debts Expense $17,350; credit Allowance for Doubtful Accounts $17,350.

Question

A company uses the percent of receivables 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 3.5% 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 $13,975; credit Allowance for Doubtful Accounts $13,975. 
B)Debit Bad Debts Expense $15,225; credit Allowance for Doubtful Accounts $15,225. 
C)Debit Bad Debts Expense $16,475; credit Allowance for Doubtful Accounts $16,475. 
D)Debit Bad Debts Expense $7,350; credit Allowance for Doubtful Accounts $7,350. 
E)Debit Bad Debts Expense $17,350; credit Allowance for Doubtful Accounts $17,350.

Quizplus · Accepted Answer

$435,000 * 0.035 = $15,225 + $1,250 = $16,475

A Company Uses the Percent of Receivables Method to Determine