Collision Corporation
Data for Collision Corporation for the Year $~~~~~~$

question 67

Multiple Choice

Collision Corporation
Data for Collision Corporation for the year ended December 31, 2012, are presented below.
Credit Sales $~~~~~~$ $\$ 2,000,000$
Sales retuns and allowances $~~~~~~$ 40,000
Accounts receivable (December 31, 2012) $~~~~~~$ 610,000
Allowance for bad debts
$~~$ (Before adjustment at December 31, 2012) $~~~~~~$ 15,000
Estimated amount of uncollected accounts based on aging analysis $~~~~~~$ 55,000
-Refer to the information provided for Collision Corporation. If Collision estimates its bad debts at 2% of net credit sales, what amount will be reported as bad debt expense for 2012?

• A) $40,000
• B) $39,200
• C) $24,200
• D) $25,000

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Definitions:

Tax Burden

The total amount of tax that individuals, businesses, or specific sectors of the economy bear.

Federal Personal Income Tax

A tax levied by the federal government on the income of individuals, with rates varying based on income levels.

Tax Exemptions

Deductions allowed by law to reduce taxable income, often for specific categories of expenses or investments.

Progressive

Pertaining to a type of tax system where the tax rate increases as the taxable amount or income increases, often aimed at reducing income inequality.