Gross Accounts Receivable Is $10,000

question 92

Multiple Choice

Gross Accounts Receivable is $10,000.Allowance for Doubtful Accounts has a credit balance of $200.Net sales for the year are $150,000.In the past,2% of sales had proved uncollectible,and an aging of the receivables indicates $1,200 is doubtful.Under the balance sheet approach,Bad Debts Expense for the year is:

• A)$1,000.
• B)$3,000.
• C)$2,800.
• D)$1,200.

---

Definitions:

Accounts Receivable

The money owed to a business by its clients or customers for goods or services provided on credit.

Compensating Balance

A minimum balance that must be maintained in a bank account, often required by banks as a condition for loans or to waive service charges.

Effective Annual Interest Rate

The interest rate on an investment or loan, which accounts for compounding over a given period.