Reference no: EM132821507

The Accounts Receivable balance for Computer Co. is $70,000 as of December 31st. Before calculating and recording Bad Debt Expense for the year, the Allowance for Doubtful Accounts has a credit balance of $80.

• Credit sales for the year were $65,000. In the past, 3% of net credit sales have proved uncollectible.
• An aging of Computer Co.'s Accounts Receivable results in a $2,000 estimate for the Allowance for Doubtful Accounts. There were no write-offs during the year.

Problem 1: Assume Computer Co. uses the analysis of receivables method. What is "Bad Debt Expense" on its Income Statement for the year ending December 31st?

Option 1: $2,000

Option 2: $1,920

Option 3: $1,950

Option 4: $2,030