At the Beginning of 2014, Mark's Sales Had the Following

question 130

Multiple Choice

At the beginning of 2014, Mark's sales had the following ledger balances: During the year there were $450 000 of credit sales, $460 000 of collections, and $3 700 of write- offs. At the end of the year, Mark's adjusted for Bad debts expense using the percentage- of- sales method, and applied a rate, based on past history, of 1.2%. At the end of the year, what was the balance in the Bad debts expense?

• A)$6 400
• B)$2 300
• C)$5 400
• D)$2 700

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Definitions:

Covariance

A measure indicating the extent to which two variables change in tandem, helping to assess the degree to which they move in relation to each other.

Correlation Coefficient

A statistical measure that calculates the strength and direction of a linear relationship between two variables on a numerical scale from -1 to 1.

Standard Deviations

A measure of the dispersion of a set of data from its mean, often used in finance to quantify the volatility of returns.

Perfectly Negatively Correlated

A relationship between two variables where one variable increases as the other decreases with a correlation coefficient of -1.