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BigorU [14]
3 years ago
9

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: Accounts receivable $ 345,000 debit Allowance for uncollectible accounts 700 debit Net Sales 790,000 credit 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?
Business
1 answer:
ValentinkaMS [17]3 years ago
6 0

Answer: $5,440

Explanation:

When using the percent of sales method to determine bad debts, the company estimates a percentage that it believes will results in uncollectible debt and then applies it to the sales/revenue figure. The figure that is calculated is then debited along with the debit balance on the Allowance for doubtful accounts to the Bad debts account for the year and credited to the Allowance for doubtful accounts.

This company estimates that they will have 0.6% of credit sales uncollectible.

There are also $790,000 in sales of which all are on credit.

The Uncollectible estimate is therefore,

= 790,000 * 0.6%

= $4,740

This figure is then added to the debit amount on the Allowance for Uncollectible Accounts.

= 4,470 + 700

= $5,440

Note; A debit balance on the Allowance for doubtful debt account signifies that the bad debts were higher than anticipated the last time. This is why the figure is added to the current bad debts expense.

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3 years ago
Economically rational means that consumers and firms
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Answer:

D, Take actions that are appropriate to reach goals given available information.

Explanation:

Rational in economics can be said to be a situation where an individual or company takes the best decisions to reach his/her or its goals.

This could also mean that the ability to make a decision that maximizes the accomplishment or benefits for an individual.

cheers.

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2 years ago
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3 years ago
Baker's Supply imposes a payback cutoff of 3.5 years for its international investment projects. If the company has the following
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Answer:

Both projects fall within the acceptable payback period, so, both projects can be accepted.

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I hope my answer helps you

7 0
2 years ago
When perfectly competitive firm X sells three units of product Z, its marginal revenue is $4.67. When it sells one hundred units
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Answer:

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