Jefferson uses the percent of method of estimating uncollectible expense. Based on past history, 2% of credit sales are expected t be uncollectible. Sales for the current year are $5,550,000. Which of the following is correct?

a. Bad deb expenses is estimated to be $11,100.

b. Uncollectible accounts are estimated to be $55,500.

c. Uncollectible accounts are estimated to be $111,000.

d. Bad debt expense is estiated to be $5,550

Question

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6 January, 17:57

Jefferson uses the percent of method of estimating uncollectible expense. Based on past history, 2% of credit sales are expected t be uncollectible. Sales for the current year are $5,550,000. Which of the following is correct?

a. Bad deb expenses is estimated to be $11,100.

b. Uncollectible accounts are estimated to be $55,500.

c. Uncollectible accounts are estimated to be $111,000.

d. Bad debt expense is estiated to be $5,550

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Answers (1)

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Dahlia Browning · Answer 1

c. Uncollectible accounts are estimated to be $111,000.

Explanation:

Given that

Sales = $55,50,000

Expected percentage = 2%

The computation of given question is given below:-

Expected uncollectible amount = Sales * Expected percentage

= $55,50,000 * 2%

= $111,000

Therefore for computing the Expected uncollectible amount we simply multiply the sales with expected percentage.