Jefferson Uses the Percent of Sales Method of Estimating Uncollectible

Multiple Choice

Jefferson uses the percent of sales method of estimating uncollectible expenses. Based on past history, 2% of credit sales are expected to be uncollectible. Sales for the current year are $5,550,000. Which of the following is correct?

A) Uncollectible accounts are estimated to be $55,500.
B) Uncollectible accounts are estimated to be $111,000.
C) Bad debt expense is estimated to be $5,550.
D) Bad debt expense is estimated to be $11,100.