Answer:
The correct answer is D
Explanation:
Computing the amount of estimate uncollectible accounts using the percentage of sales method which is as follows:
Bad debt expense amount = Credit Sales × % of credit sales
where
Credit Sales amounts to $893,000
% is 3%
Putting the values above:
Bad debt expense amount = $893,000 × 3%
Bad debt expense amount = $26,790
And the journal entry which is to be posted is as:
Bad Debt Expense A/c...........................................Dr $26,790
Allowance for Doubtful Accounts A/c...........Cr $26,790
Note: The percentage of sales method does not consider the existing balance in the allowance for doubtful account.
