On January 1, Davidson Services Has the Following Balances

question 44

Multiple Choice

On January 1, Davidson Services has the following balances:
Davidson has the following transactions during January: Credit sales of $100,000, collections of credit sales of $85,000, and write-offs of $15,000. Davidson uses the direct write-off method.
-At the end of January, the balance in Accounts Receivable is:

• A) $16,000.
• B) $24,000.
• C) $68,000.
• D) $28,000.

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Definitions:

Mail Float

The time delay between when a check is written and mailed, and when the recipient actually receives and processes the payment.

Processing Float

The time difference between when a payment is made and the funds are actually available in the payee's account.

Credit Policy

Guidelines that govern a company's extension of credit to customers, determining who is eligible and on what terms.

Credit Sales

Sales made by a business on credit, allowing customers to pay at a later date.