Ace Computing Company on January 1, Year 1, the Accounts Receivable and the Receivable

question 36

Multiple Choice

Ace Computing Company
On January 1, Year 1, the accounts receivable and the allowance for doubtful accounts carried balances of $40,000 and $1,500 respectively. During the year, the company reported $80,000 of credit sales. There were receivables of $500 written off as uncollected in Year 1. Cash collections of receivables amounted to $78,200. The company estimates that it will be unable to collect 4% of the year-end accounts receivable balance.
-Refer to the figure Ace Computing Company.What amount of bad debts expense will be recognized in the Year 1 income statement?

• A) $142
• B) $652
• C) $1,450
• D) $1,652

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