Accounting questions! please help! Im doing an online interview!?
The Allowance for Doubtful Debt account of Kara Trading Co has a balance of $5,253 as of 1 July 2000. At the end of the period, $7,896 was written off and $181,130 new credit sales were made. The company's policy is to provide for doubtful debts based on the aging of Accounts Receivable. This was calculated to be $10,086. What is the amount of bad and doubtful debt expense for the period? (Format example = 12,988; that is, include a comma but no dollar sign).
Because accountants are unable to tell exactly which sales will prove uncollectable, at the end of a year they:
1. Do not record any credit sales until they have been collected 2. Estimate the uncollectables and match bad debts expense against sales 3. Deduct the actual uncollectables from sales 4. Ignore the potential bad debts 5. None of the above
Thanks!
Answer:
Based on my experience, #3 would be the correct answer. Accountants work with actual numbers, not forecastable or probable.
3
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