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Brrunno [24]
3 years ago
14

A company uses the percent of sales method to determine its bad debts expense. At the end of the current year, the company's una

djusted trial balance reported the following selected amounts: 375,000 debit Accounts receivable 500 debit Allowance for uncollectible accounts 800,000 credit Net Sales All sales are made on credit. Based on past experience, the company estimates that 0.6% of net credit sales are uncollectible. What amount should be debited to Bad Debts Expense when the year-end adjusting entry is prepared? a.$1,275 b.$1,775 c.$4,500 d.$4,800 e.$5,500
Business
1 answer:
Maru [420]3 years ago
8 0

Answer:

Option E is the correct answer

5300$ is the correct answer.

Explanation:

Credit Sales = $800000

Uncollectible net sales = $800000*0.6% = $4800

Hence, balance in Allowance for uncollectible accounts after adjustment should be $4800 credit

Balance already in the account = $500 debit

Hence, adjustment required is $5300 credit

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