Based on the Following Information for Calendar 2021 If Bad Debts Expense Is Estimated at 1

question 101

Multiple Choice

Based on the following information for calendar 2021: $$\begin{array} { | l | r | } \hline \text { Accounts receivable, January 1 } & \$ 125,000 \\\hline \text { Credit sales during the year } & 1,400,000 \\\hline \text { Allowance for doubtful accounts, January 1 } & 15,000 \\\hline \text { Cash collected on accounts receivable during the year } & 1,350,000 \\\hline \text { Uncollectible accounts written off during the year } & 8,000 \\\hline\end{array}$$ If bad debts expense is estimated at 1.5% of credit sales, what is the balance in the allowance for doubtful accounts at year end?

• A)$13,000
• B)$15,625
• C)$28,000
• D)$36,000

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Definitions:

Joseph Schumpeter

An Austrian political economist known for his theories on business cycles, economic development, and the concept of creative destruction.

Profit

The difference between total revenue and total cost.

Rent

Payment made by a tenant to a landlord for the use of a property, room, or apartment for a specified period.

Monopoly Profits

Extraordinary profits earned by a monopoly due to its unique position of having no competition, allowing for higher prices and lower production.