Modern Designs is a new business. During its first year of operations, credit sales were $43,000 and collections of credit sales were $34,000. One account, $625, was written off. Management uses the percent-of-sales method to account for bad debts expense and estimates 3% of credit sales to be uncollectible. Bad debts expense for the first year of operations is ________.
A) $665
B) $1290
C) $625
D) $2310
B) $1290
Explanation: Bad debts expense = ($43,000 × 0.03) = $1290
You might also like to view...
The estimated value of sales returns should reduce gross sales in the period items are sold, not in the later period items are returned
Indicate whether the statement is true or false
The use of realistic predetermined unit costs to facilitate product costing, cost control, cost flow, and inventory valuation is a description of the
a. flexible budget concept. b. budgetary control concept. c. capacity level concept. d. standard cost accounting concept.
Which of the following is an example of noise in the communication process?
A. message B. perceptual biases C. encoder D. decoder
Which of the following is true of administrative agencies?
A) An enabling statute delegates congressional executive powers to them for the purpose of serving the public interest. B) An enabling statute delegates legislative powers to them in order to settle or adjudicate disputes with businesses. C) All their proposed rules, whether major or minor, are subject to the review of the Office of Management and Budget. D) They have to identify possible alternatives to a proposed regulation that would require no government action.