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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 income statement approach (an allowance method)to account for uncollectible accounts,uncollectible accounts expense for March is:
A)$11,500.
B)$17,500.
C)$19,500.
D)$13,500.

Question

Quizplus · Accepted Answer

To calculate the uncollectible accounts expense for March using the income statement approach, we use the following formula:

Uncollectible accounts expense = net credit sales x estimated percentage of uncollectible accounts

We are given that Dynamic, Inc. had credit sales of $675,000 for March, and that management estimates that 2% of net credit sales will be uncollectible. Therefore:

Uncollectible accounts expense = $675,000 x 2% = $13,500

So the answer is D, $13,500.

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