On January 1, 2014 the Accounts Receivable and the Allowance

question 22

Multiple Choice

On January 1, 2014 the Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $30,000 and $500, respectively. During the year the company reported $75,000 of credit sales. There were $550 of receivables written-off as uncollectible in 2014. Cash collections of receivables amounted to $74,550. The company estimates that it will be unable to collect one percent (1%) of credit sales.
The amount of uncollectible accounts expense recognized in the 2014 income statement will be

• A) $700.
• B) $300.
• C) $750.
• D) $550.

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Definitions:

Single Customer

A business model or scenario where a company relies heavily or solely on a single client for its revenue, posing concentrated risk.

Joint Venture

A business venture collaboratively started by two or more entities who maintain their separate identities.

Proportionately Adjusted

A process of adjusting figures or data so that they accurately reflect a proportional relationship within a specified context.

Cost Method

An accounting approach that involves recording investments at their original purchase cost.