Chez Fred Bakery estimates the allowance for uncollectible accounts at 3% of the ending balance of accounts receivable. During 2018, Chez Fred's credit sales and collections were $125,000 and $131,000, respectively. What was the balance of accounts receivable on January 1, 2018, if $180 in accounts receivable were written off during 2018 and if the allowance account had a balance of $750 on December 31, 2018?

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$\begin{array}{lr}
\text { A/R } 1 / 1 / 2018 & ? \
\text { Collections } & (131,000) \
\text { Write-offs } & (180) \
\text { Credit sales } & 125,000\\mathrm{A} / \mathrm{R}&\$25,000&[\$ 750=3 \% \text { of } \mathrm{AR} ; \text { so } \mathrm{AR}=\$ 750 \div .03=\12 / 31 / 2018&&\$25,000]
\end{array}$ Therefore, A/R, 1/1/2018 = $31,180

Chez Fred Bakery Estimates the Allowance for Uncollectible Accounts at 3