question archive Lemmon Company uses the? percent-of-sales method to estimate uncollectibles
Lemmon Company uses the? percent-of-sales method to estimate uncollectibles
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Lemmon Company uses the? percent-of-sales method to estimate uncollectibles. Net credit sales for the current year amount to$100,000?, and management estimates 2?% will be uncollectible. Allowance for Doubtful Accounts prior to adjustment has a credit balance of $3,000. The amount of expense to report on the income statement will be
A) $5,000
B) $1,500
C) $2,000
D) $6,000
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Answer:
Net credit sales for the current year amount = $100,000
management estimates 2?% will be uncollectible = $100000*2% = 2000
Allowance for Doubtful Accounts prior to adjustment =3000
Answer would be
A) $5000 ( $100000*2% + 3000 = 5000)
