At the Beginning of 2015, Peter Dots Has the Following

question 102

Multiple Choice

At the beginning of 2015, Peter Dots has the following ledger balances: During the year, credit sales amounted to $800,000. Cash collected on credit sales amounted to $760,000 and $18,000 has been written off. At the end of the year, 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 in Bad Debts Expense would be:

• A)$20,000.
• B)$40,000.
• C)$28,000.
• D)$27,000.

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Definitions:

Accounting Profit

The financial gain calculated by subtracting total explicit costs from total revenue.

Perfect Information

A market condition where all participants have access to complete and accurate information concerning all aspects of the market and relevant transactions.

Create Wealth

Involves generating significant assets or resources through various means such as investment, entrepreneurship, or economic activities.

Resource Value

The worth of a resource based on its ability to produce goods, provide services, or satisfy needs and wants in an economy.