A Newly Created Design Business Called Smart Art Is Just

Multiple Choice

A newly created design business called Smart Art is just finishing up its first year of operations. During the year, there were credit sales of $40 000 and collections of $36 000. One account for $650 was written off. Smart Art uses the percentage- of- sales method to account for Bad debts expense, and has decided to use a factor of 2% for their year- end adjustment of Bad debts expense. At the end of the year, what is the ending balance in the Allowance for doubtful debts?

A) $250
B) $150
C) $800
D) $1 450