At the beginning of? 2019, Elliott, Inc. has the following account? balances: Ac

Question

At the beginning of? 2019, Elliott, Inc. has the following account? balances: Accounts Receivable?????? $ 41 comma 000 $41,000???(debit balance) Allowance for Bad Debts?? $ 5 comma 000 $5,000???(credit balance) Bad Debts Expense ? $0 During the? year, credit sales amounted to $ 820 comma 000 $820,000. Cash collected on credit sales amounted to $ 790 comma 000 $790,000?, and $ 18 comma 000 $18,000 has been written off. At the end of the? year, the company adjusted for bad debts expense using the percent minus ?of minus ?sales method and applied a? rate, based on past? history, of 2.5 2.5?%. The ending balance in the Allowance for Bad Debts is? ________. A. $ 7 comma 500 $7,500 B. $ 5 comma 000 $5,000 C. $ 2 comma 500 $2,500 D. $ 6 comma 750 $6,750

Explanation / Answer

Ending balance in the Allowance for Bad Debts = 5000-18000+(820000*2.5%)= $7500

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