Reference no: EM132821493

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 the balance in the Allowance for Doubtful Accounts after Computer Co. records its adjustment entry relating to Bad Debt Expense?

Option 1: $1,950

Option 2: $2,000

Option 3: $1,920

Option 4: $2,030