8. At the beginning of 2018, Ana’s Sour Drinks, Inc. has the following account b

Question

8. At the beginning of 2018, Ana’s Sour Drinks, Inc. has the following account balances: Accounts Receivable $44,000 (debit balance) Allowance for Bad Debts $6,000 (credit balance) Bad Debts Expense $0 During the year, credit sales were $750,000. Cash collected on credit sales amounted to $660,000, and $18,000 has been written off. At the end of the year, Ana’s Sour Drinks adjusted for bad debts expense using the percent-of-sales method and applied a rate, based on past history, of 3.5%. The ending balance of Accounts Receivable is ________. A) $90,000 debit balance B) $152,000 credit balance C) $116,000 debit balance D) $2,250 credit balance

Explanation / Answer

Bad debt expense = 750000*3.5% = 26250

Calculate ending balance of account receivable :

So answer is c) $116000 Debit balance

Beginning balance 44000 Credit sales 750000 Less: Account collected -660000 Less; Written off -18000 Ending balance of account receivable 116000

Related Questions

Navigate

• Browse (All)
• Browse 8
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.