Question

# Chez Fred Bakery estimates the allowance for uncollectible accounts at 2% of the ending balance of...

Chez Fred Bakery estimates the allowance for uncollectible accounts at 2% of the ending balance of accounts receivable. During 2021, Chez Fred's credit sales and collections were \$113,000 and \$132,000, respectively. What was the balance of accounts receivable on January 1, 2021, if \$120 in accounts receivable were written off during 2021 and if the allowance account had a balance of \$930 on December 31, 2021?

Multiple Choice

\$32,000.

\$500.

\$65,620.

None of these answer choices are correct.

Credit sales = \$113,000

Cash collection = \$132,000

Accounts receivable written off = \$120

Allowance for doubtful accounts, ending = \$930

Allowance for doubtful accounts, ending = 2% of ending accounts receivable

930 = Ending accounts receivable x 2%

Ending accounts receivable = \$46,500

Ending accounts receivable = Beginning accounts receivable + Credit sales -Cash collection -Accounts receivable written off

46,500 = Beginning accounts receivable+113,000-132,000-120

Beginning accounts receivable = \$65,620

The balance of accounts receivable on January 1, 2021 = \$65,620

Third option is correct.

Kindly comment if you need further assistance. Thanks

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