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Dynamic,Inc.had credit sales of $675,000 for March.Accounts receivable of $6,000 were determined to be worthless and were written off during March.Accounts receivable total $575,000 at March 31.Management feels that based on past experience,approximately 2% of net credit sales will prove to be uncollectible.
-Assuming Dynamic,Inc.uses the direct write-off method of accounting for uncollectible accounts,uncollectible accounts expense for March is:
A)$13,500.
B)$6,000.
C)$11,500.
D)$17,500.

Question

Quizplus · Accepted Answer

The direct write-off method only recognizes uncollectible accounts when they are actually determined to be worthless and written off. Therefore, the uncollectible accounts expense for March is only the $6,000 that was actually written off, not the estimated 2% of net credit sales.

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