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)$4,625
B)$3,960
C)$5,290
D)$4,750
E)$4,825

Question

Quizplus · Accepted Answer

The bad debts expense is calculated as 0.5% of sales. Therefore, $925,000 * 0.5% = $4,625.

Craigmont Uses the Allowance Method to Account for Uncollectible Accounts