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21 July, 07:25

Chez Fred Bakery estimates the allowance for uncollectible accounts at 3% of the ending balance of accounts receivable. During 2013, Chez Fred's credit sales and collections were $120,000 and $143,000, respectively. What was the balance of accounts receivables on January 1, 2013, if $150 in accounts receivable were written off during 2013 and if the allowance account had a balance of $990 on December 31, 2013? a. $43,000. b. $840. c. $56,150. d. None of the above is correct.

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  1. 21 July, 07:48
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    c. $56,150

    Explanation:

    We know that

    Ending account receivable balance = Beginning account receivable + credit sales - collections - written off amount

    $33,000 = Beginning account receivable + $120,000 - $143,000 - $150

    $33,000 = Beginning account receivable - $23,150

    So, the Beginning account receivable would be

    = $33,000 + $23,150

    = $56,150

    The ending accounts receivable is computed below

    = $990 : 3%

    = $33,000
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