QUESTION 40 During June the Newton Corporation recorded cash sales of $300,000 a

Question

QUESTION 40

During June the Newton Corporation recorded cash sales of $300,000 and credit sales of $200,000. Based on its experience, the company expects to be unable to collect 4% of its credit sales. On June 30 the Corporation's balance sheet reported balances in many accounts, including the following:

cash $52,000

accounts receivable $110,000

allowance for uncollectible accounts ($6,000)

supplies $6,200

accounts payable ($42,100)

Calculate the dollar amount of the Corporation's June uncollectible accounts expense.

a. $20,000

b. $2,000

c. $8,000

d. $6,000

Explanation / Answer

Uncollectible account expense is equal to 4% of credit sales

Uncollectible account expense = credit sales*percentage

                                                  = 200000*4%

Uncollectible account expense = 8000

so answer is c) $8,000

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