C is corrent because when bad debt expense is estimated based on a percentage of credit sales, the matching principle is being followed. The entity is attempting to estimate what part of this year’s sales will not be collected, thereby matching this year’s expense with this year’s sales.
A is incorrect because when bad debt expense is estimated based on a percentage of credit sales, the matching principle is being followed. The entity is attempting to estimate what part of this year’s sales will not be collected, thereby matching this year’s expense with this year’s sales.
B is incorrect because when bad debt expense is estimated based on a percentage of credit sales, the matching principle is being followed. The entity is attempting to estimate what part of this year’s sales will not be collected, thereby matching this year’s expense with this year’s sales.
D is incorrect because when bad debt expense is estimated based on a percentage of credit sales, the matching principle is being followed. The entity is attempting to estimate what part of this year’s sales will not be collected, thereby matching this year’s expense with this year’s sales.
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