Ace Computing Company on January 1, the Accounts Receivable and the Allowance for the Allowance

question 104

Multiple Choice

Ace Computing Company
On January 1, the Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $40,000 and $1,500 respectively. During the year, the company reported $80,000 of credit sales. There were $500 of receivables written off as uncollected during the year. Cash collections of receivables amounted to $78,200. The company estimates that it will be unable to collect 4% of the year-end accounts receivable balance.
-Refer to the Ace Computing Company. The amount of bad debts expense recognized in the income statement will be:

• A)$1,652
• B)$ 652
• C)$ 142
• D)$1,450

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Definitions:

Sequential Method

A process or technique that follows a specific order or sequence, often used in operations or calculations.

Janitorial Department

A department within an organization responsible for maintaining cleanliness, hygiene, and sanitation within the premises.

Square Footage

The area of space measured in square feet, commonly used in real estate to describe the size of a building or room.

Direct Method

A way of preparing the cash flow statement where actual cash receipts and cash payments from operating activities are recorded, showing the sources and uses of cash.