Gross Accounts Receivable Is $21,000

question 32

Multiple Choice

Gross Accounts Receivable is $21,000. Allowance for Doubtful Accounts has a credit balance of $600. Net credit sales for the year are $132,000. In the past, 3% of credit sales had proved uncollectible, and an aging of the receivables indicates $1,800 is doubtful. Under the balance sheet approach, Bad Debts Expense for the year is:

• A) $2,400.
• B) $4,560.
• C) $3,960.
• D) $1,200.

---

Definitions:

Total Variable Inspection Cost

The cumulative cost that varies directly with the volume of production or service, specifically related to the inspection of products or services to ensure quality.

Variable Inspection Cost

The expenses associated with quality control measures that fluctuate with the volume of production.

Machine-Hours

A measure of production output or activity based on the number of hours that machines are operated.

Average Costs

The total costs of production divided by the number of units produced, often used to assess cost efficiency.