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

question 65

Multiple Choice

Burnett Corporation had a 1/1/07 balance in the Allowance for Doubtful Accounts of $15,000.During 2007, it wrote off $10,800 of accounts and collected $3,150 on accounts previously written off.The balance in Accounts Receivable was $300,000 at 1/1 and $360,000 at 12/31.At 12/31/07, Burnett estimates that 5% of accounts receivable will prove to be uncollectible.What should Burnett report as its Allowance for Doubtful Accounts at 12/31/07?

• A)$7,200.
• B)$7,350.
• C)$10,350.
• D)$18,000.

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Definitions:

Days' Sales In Inventory

A financial metric that estimates how many days it will take to sell the entire inventory, indicating the liquidity of inventory.

Profit Margin

A financial metric that measures the extent to which a company or business activity makes money, expressed as a percentage of revenue.

Profit Margin Ratio

A financial metric that measures the percentage of revenue that exceeds the cost of goods sold, indicating the efficiency with which a company produces goods.

Gross Margin Ratio

A financial metric that measures the difference between revenue and cost of goods sold, expressed as a percentage of revenue.