At the Beginning of 2017, Delicious Drinks, Inc

question 77

Multiple Choice

At the beginning of 2017, Delicious Drinks, Inc. has the following account balances: Accounts Receivable $40,000 (debit balance)
Allowance for Bad Debts $7,000 (credit balance)
Bad Debts Expense $0
During the year, credit sales amounted to $810,000. Cash collected on credit sales amounted to $770,000, and $17,000 has been written off. At the end of the year, the company adjusted for bad debts expense using the percent-of-sales method and applied a rate, based on past history, of 2.5%. The ending balance of Accounts Receivable is ________.

• A) $40,000
• B) $63,000
• C) $40,500
• D) $17,000

---

Definitions:

Capital Expenditures

Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment.

Free Cash Flow

The cash that a business produces after deducting cash outflows needed for operational activities and the upkeep of its fixed assets.

Cash Dividends

Distributions of earnings paid to shareholders in the form of cash.

Free Cash Flow

The amount of cash a company generates after accounting for cash outflows to support operations and maintain its capital assets.