Smart Art Is a New Establishment

question 78

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. The ending balance in Allowance for Bad Debts account would be:

• A)$150.
• B)$800.
• C)$250.
• D)$1,450.

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