Smart Art is a new establishment. During the first year, there were credit sales of $40,000 and collections of credit sales of $36,000. One account for $650 was written off. The company decided to use the percent-of-sales method to account for bad debts expense, and decided to use a factor of 2% for their year-end adjustment of bad debts expense. At the end of the year, what is the ending balance in Accounts Receivable?
A)$4,000
B)$3,600
C)$3,350
D)$3,200

Question

Quizplus · Accepted Answer

The ending balance in Accounts Receivable is calculated as follows: Starting with credit sales of $40,000, subtract collections of $36,000 and the write-off of $650, resulting in an ending balance of $3,350.

Smart Art Is a New Establishment