Use the Following Information for Questions:
Armada Inc Armada Estimates Bad Debt Expense Based on 2% of Net

question 1

Multiple Choice

Use the following information for questions:
Armada Inc.'s books revealed the following data for 2011 after all adjustments were made: $\begin{array}{lr}\text { Cash sales } & \$ 825,000 \\\text { Sales returns (on credit sales) } & 35,000 \\\text { Allowance for doubtful accounts (credit balance) } & 3,800 \\\text { Credit sales } & 575,000 \\\text { Accounts receivable } & 168,000\end{array}$ Armada estimates bad debt expense based on 2% of net credit sales.
-The net carrying value of accounts receivable before the bad debt expense is recognized is:

• A)$156,500
• B)$164,200
• C)$168,000
• D)$171,800

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Definitions:

Return and Risk-Free Rate

The difference between the total return on an investment and the risk-free rate of return, indicating the excess compensation for taking on risk.

Beta

An assessment of how much a security fluctuates in comparison to the general market.

Regression Equation

An equation that describes the relationship between a dependent variable and one or more independent variables.

CAPM

The Capital Asset Pricing Model, a formula used to determine the expected return on an investment, factoring in risk and the time value of money.