Craigmont uses the allowance method to account for uncollectible accounts. Its year-end unadjusted trial balance shows Accounts Receivable of $104,500, allowance for doubtful accounts of $665 (credit) and sales of $925,000. If uncollectible accounts are estimated to be 0.5% of sales, what is the amount of the bad debts expense adjusting entry?
A) $5,290
B) $4,625
C) $4,750
D) $4,825
E) $3,960

Question

Quizplus · Accepted Answer

The bad debts expense is calculated as 0.5% of sales, which is 0.5% of $925,000, resulting in $4,625.

Craigmont Uses the Allowance Method to Account for Uncollectible Accounts