Niagara Art Is a New Business

question 167

Multiple Choice

Niagara Art is a new business.During its first year of operations,credit sales were $44,000 and collections of credit sales were $33,000.One account,$625,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.Bad debts expense for the first year of operations is ________.

• A)$255
• B)$880
• C)$625
• D)$1,540

---

Definitions:

Friction Discs

Components within a clutch or brake assembly that create friction necessary for engaging or disengaging the drive mechanism.

Transmission Size

The physical dimensions or capacity of a vehicle's transmission, indicating its ability to handle power.

Hydromechanical Transmission

A transmission system that combines hydraulic and mechanical components to transfer power from the engine to the wheels.

Inhibitor Valve

A type of valve designed to regulate or stop fluid flow under specific conditions to protect systems from damage or to control processes.