ACC 400 Course Great Wisdom / tutorialrank.com ACC 400 Course Great Wisdom / tutorialrank.com | Page 9
9. Manning Company uses the percentage of receivables method for
recording bad debts expense. The accounts receivable balance is
$200,000 and credit sales are $1,000,000. Management estimates that
5% of accounts receivable will be uncollectible. What adjusting entry
will Manning Company make if the Allowance for Doubtful Accounts
has a credit balance of $2,000 before adjustment?
a.
Bad Debts Expense
Allowance
10,000
for
Doubtful
Accounts
10,000
b.
Bad Debts Expense
Allowance
8,000
for
Doubtful
Accounts
8,000
c.
Bad Debts Expense
8,000
Accounts
Receivable
8,000
d.
Bad Debts Expense
10,000