A & B Commercial Cleaning is a new business. During its first year of operations, credit sales were $40,000 and collections from credit sales were $35,000. One account for $650 was written off. Management uses the percent-of-sales method to account for bad debts expense and estimates 2% of credit sales to be uncollectible. What is the balance of Accounts Receivable at the end of the first year?

Question

Quizplus · Accepted Answer

The balance of Accounts Receivable is calculated as: Beginning Accounts Receivable ($0) + Credit Sales ($40,000) - Collections ($35,000) - Write-offs ($650) = $4,350.

A & B Commercial Cleaning Is a New Business