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:

Income Statement

A financial statement that shows a company’s revenues, expenses, and net income over a specified period of time, demonstrating the company's financial performance.

Earnings Per Share

A company's net income divided by the number of outstanding shares of its common stock, indicating the amount of profit each share is entitled to.

Balance Sheet

A financial statement that provides a snapshot of a company’s financial position at a specific point in time, detailing assets, liabilities, and equity.

Income Statement

A financial statement that shows a company's revenues and expenses over a specified period, resulting in a net income or loss.