In 2014, Freeze Company Had Credit Sales of $1,200,000 and Granted

question 38

Multiple Choice

In 2014, Freeze Company had credit sales of $1,200,000 and granted sales discounts of $24,000. On January 1, 2014, Allowance for Doubtful Accounts had a credit balance of $30,000. During 2014, $50,000 of uncollectible accounts receivable were written off. Past experience indicates that 3% of net credit sales become uncollectible. What should be the adjusted balance of Allowance for Doubtful Accounts at December 31, 2014?

• A) $15,280
• B) $16,000
• C) $35,280
• D) $66,000

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Definitions:

Segment Margin

The amount of profit or loss generated by a particular segment of a business, after accounting for the direct costs and overheads attributable to that segment.

Avoidable Cost

Expenses that can be eliminated if a particular decision or action is not pursued.

Special Order

A special order is an order for goods or services that is outside the company's normal scope of operations or production schedule, often requiring special pricing or terms.

Minimum Selling Price

The lowest price at which a product can be sold to cover its production costs without making a loss.