Fresh Dairy Company uses the allowance method and estimates uncollectible accounts based on a percent of sales. Net credit sales represent 75% of total sales. Total sales for 2019 were $840,000. Historically, 1/2 of 1% of net credit sales have been uncollectible. At December 31, 2019, the balance in allowance for doubtful accounts is a $120 credit. What is the balance in bad-debt expense after the adjusting entry is made?
A)$3,030
B)$4,200
C)$3,150
D)$3,270

Question

Quizplus · Accepted Answer

Net credit sales are 75% of $840,000, which is $630,000. The estimated uncollectible amount is 0.5% of $630,000, which is $3,150.

Fresh Dairy Company Uses the Allowance Method and Estimates Uncollectible