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Question(s) / Instruction(s):

 A company used the percent of sales method to determine its bad debts expense. At the end of the current year, the company's unadjusted trial balance reported the following selected amounts:

Accounts Receivable                                                      $355,000 debit

Allowance for Uncollectable Accounts                    $500            debit

Net Sales                                                                             $800,000 Credits

All sales are made on credit. Based on past experience, the company estimates 0.6% of credit sales to be uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

a)            Bad Debt Expense                           1,275

Allowance for Doubtful Accounts             1,275

b)            Bad Debt Expense                           1,775

Allowance For Doubtful Accounts             1,775

c)            Bad Debt Expense                           4,800

Allowance for Doubtful Accounts             4,800

d)            Bad Debt Expense                           5,500

Allowance for Doubtful Accounts                             5,500

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