In the First Year of Operations,2012,Ringsted Repair Service Recognized $265,000

question 144

Essay

In the first year of operations,2012,Ringsted Repair Service recognized $265,000 of service revenue on account.The ending accounts receivable balance was $75,000.The company estimates that 3% of sales on account will not be collected.Assume there were no other transactions affecting accounts receivable.
Required:
a)What amount of cash was collected in 2012?
b)What amount of uncollectible accounts expense was recognized in 2012?

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Definitions:

Incremental Fixed Cost

Additional fixed costs that are incurred when a company expands its operations or production levels beyond the current scope.

Order Size

The quantity of goods or services purchased in a single transaction or order, which can impact volume discounts, shipping costs, and inventory management.

Trade-off

A situation that involves losing one quality or aspect of something in return for gaining another quality or aspect.

Responsiveness

Refers to the ability of a system or organization to react quickly and effectively to changes, demands, or opportunities.