Rusch Corporation Had a 1/1/07 Balance in the Allowance for Doubtful

question 75

Multiple Choice

Rusch Corporation had a 1/1/07 balance in the Allowance for Doubtful Accounts of $12,000.During 2007, it wrote off $8,640 of accounts and collected $2,520 on accounts previously written off.The balance in Accounts Receivable was $240,000 at 1/1 and $288,000 at 12/31.At 12/31/07, Rusch estimates that 5% of accounts receivable will prove to be uncollectible.What should Rusch report as its Allowance for Doubtful Accounts at 12/31/07?

• A)$5,760.
• B)$5,880.
• C)$8,280.
• D)$14,400.

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Definitions:

Par Preferred Stock

A type of preferred stock that has a nominal face value, which is the amount paid out to shareholders during liquidation before common stockholders.

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, usually with dividends that are paid out prior to those to common stockholders.

Common Stock

A type of equity security that represents ownership in a corporation, with holders typically having voting rights and receiving dividends.

Market Price

The present rate at which a good or service is available for purchase or sale in an open market.