Answer:
The correct answer is C
Explanation:
Computing the amount of the adjusting entry which is to be recorded for the provision of doubtful accounts using the percentage of sales method:
Provision for doubtful accounts = Net Sales × Estimated uncollectible accounts expense
where
Net Sales is $600,000
Estimated uncollectible accounts expense is 3%
So, putting the values above:
Provision for doubtful accounts = $600,000 × 3%
Provision for doubtful accounts = $18,000
And the entry to be posted is as:
Bad debts expense A/c...................................Dr $18,000
Allowance for doubtful accounts A/c..........Cr $18,000
Note: The credit balance of Allowance for Doubtful Accounts will not considered in this method while computing the provision for doubtful accounts.
