28. The books of Saune Corporation provided the following information: Beginning

Question

28. The books of Saune Corporation provided the following information: Beginning balances: Accounts receivable Allowances for doubtful accounts (a credit) S 50 000 3 000 Transactions during the yea Sales revenue (of which 172 were on credit) Collections on accounts receivable Accounts written off as uncollectible 2 000 000 980 000 4 000 Past collection experience has indicated that 2% ofcedit sales normally are not collected. Therefore, an adjusting entry for bad debt expense should be made in the amount of: a. $47,000 b. $20,000 c. $10 000 d. $7,000 e. $500

Explanation / Answer

Answer is b. $ 20000. Explanation: Total sales 2,000,000 Credit sales @50% 1,000,000 Uncollectible 2% Bad debts expense 20000 (1000,000*2%)

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