On January 1, 2014, the Accounts Receivable and the Allowance

question 208

Multiple Choice

On January 1, 2014, the Accounts Receivable and the Allowance for Uncollectible Accounts for Darius Company carried balances of $20,000 and $550 respectively. During the year, the company reported $70,000 of credit sales. There was $400 of receivables written off as uncollectible in 2014. Cash collections of receivables amounted to $74,700. The company estimates that it will be unable to collect 5% of the year-end accounts receivable balance.
The amount of bad debts expense recognized in the 2014 income statement will be:

• A) $545
• B) $595
• C) $745
• D) $795

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