A Newly Created Design Business Called Smart Art Is Just

question 53

Multiple Choice

A newly created design business called Smart Art is just finishing up its first year of operations. During the year, there were credit sales of $40 000 and collections of $36 000. One account for $650 was written off. Smart Art uses the percentage- of- sales method to account for Bad debts expense, and has decided to use a factor of 2% for their year- end adjustment of Bad debts expense. At the end of the year, what is the ending balance in the Allowance for doubtful debts?

• A)$250
• B)$150
• C)$800
• D)$1 450

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Definitions:

Criterion

A standard or principle by which something is judged or decided, used as a basis for comparison.

Cultures

The sum total of ways of living built up by a group of human beings, transmitted from one generation to another.

Financially Independent

Being in a condition where one possesses enough personal wealth to sustain oneself without the need to engage in active labor for essential needs.

Socioeconomic Status

An assessment of a person's or family's financial and societal status compared to others, determined by their earnings, level of education, and employment.