At the Beginning of 2017,Elixir,Inc $\$ 40,000$ (Debit Balance)
Allowance for Bad Debts

question 124

Multiple Choice

At the beginning of 2017,Elixir,Inc.has the following account balances: Accounts Receivable $\$ 40,000$ (debit balance)
Allowance for Bad Debts $\$ 5,000$ (credit balance) Bad Debts Expense $0
During the year,credit sales amounted to $850,000.Cash collected on credit sales amounted to $760,000,and $18,000 has been written off.At the end of the year,the company adjusted for bad debts expense using the percent-of-sales method and applied a rate,based on past history,of 2.5%.The ending balance in the Allowance for Bad Debts is ________.

• A)$5,000
• B)$3,250
• C)$6,000
• D)$8,250

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