National Art Is a New Business

question 168

Multiple Choice

National Art is a new business.During its first year of operations,credit sales were $40,000 and collections were credit sales of $31,000.One account,$525 was written off.Management uses the percent-of-sales method to account for bad debts expense and estimates 2% of credit sales to be uncollectible.The ending balance of Allowance for Bad Debts account is ________.

• A)$275
• B)$800
• C)$170
• D)$1,410

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Definitions:

Closing Entry

A journal entry made at the end of an accounting period to transfer the balance from temporary accounts to permanent ones, prepping the books for the next period.

Withdrawn

Refers to the act of removing funds from an account or canceling a financial transaction or operation.

Salaries

Regular payments made to employees for their service during a set period, not depending on hours worked.

Partnership

A legitimate business setup where two or more individuals collaborate in managing the business and dividing its profits.