KayCo began business January 1,2012.During 2012,sales were $650,000.The year-end accounts receivable balance was $104,000.The company estimates that 1.5% of sales will become bad debts.The financial statements for the year ended December 31,2012 will show ________.

Question

Quizplus · Accepted Answer

To calculate the bad debts expense, we first need to find the amount of accounts receivable that is expected to become bad debts. Since sales were $650,000 and the estimate for bad debts is 1.5%, we can calculate the expected amount of bad debts as:

$650,000 * 1.5% = $9,750

Therefore, the bad debts expense on the income statement will be $9,750. The net accounts receivable on the balance sheet can be calculated as:

$104,000 (year-end accounts receivable) - $9,750 (bad debts estimate) = $94,250

So, choice B is the correct answer.

KayCo Began Business January 1,2012