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 4% of accounts receivable,what is the amount of the bad debts expense adjusting entry?
A)$4,845
B)$4,180
C)$3,515
D)$3,700
E)$3,850

Question

Quizplus · Accepted Answer

The estimated uncollectible accounts are 4% of $104,500, which is $4,180. The allowance for doubtful accounts already has a credit balance of $665. Therefore, the bad debts expense adjusting entry is $4,180 - $665 = $3,515.

Craigmont Uses the Allowance Method to Account for Uncollectible Accounts