Smart Art Is a New Establishment

question 88

Multiple Choice

Smart Art is a new establishment. During the first year, there were credit sales of $40,000 and collections of credit sales of $36,000. One account for $650 was written off. The company decided to use the percent-of-sales method to account for bad debts expense, and 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 Accounts Receivable?

• A)$4,000
• B)$3,600
• C)$3,350
• D)$3,200

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Definitions:

Hemoglobin

A protein in red blood cells that carries oxygen from the lungs to the rest of the body and returns carbon dioxide from the body to the lungs.

Diffuse

To spread or scatter widely or thinly, often referring to particles, light, or substances mixing with another substance without any clear boundary.

Alveoli

Tiny sacs within the lungs where the exchange of oxygen and carbon dioxide takes place.

Capillaries

The smallest blood vessels in the body, responsible for the exchange of oxygen, carbon dioxide, and nutrients with tissues.