Reference no: EM132568144

ABC Inc. sells to wholesalers on term 2/15, n/30. ABC has no cash sales but 50% of ABC's customers take advantage of the discount. ABC uses the gross method of recording sales and trade receivables. An analysis of ABC's trade receivables balances at December 31, 2017, revealed the following:

AGE                          AMOUNT                   COLLECTIBLE

0-15 days           100,000                       100%

16-30 days          60,000                           95%

31-60 days                5,000                        90%

Over 60 days            2,500                         500

Question 1: In its December 31, 2017, statement of financial position, what amount should ABC report as allowance for discount?

Option 1: 3,350

Option 2: Answer not given

Option 3: 3,240

Option 4: 4,000

Option 5: 2,000