on its december 31 year 2 balance sheet red rock candle company reported accounts re 3387362

On its December 31, Year 2 balance sheet, Red Rock Candle Company reported accounts receivable of $ 855,000, net of an allowance for doubtful accounts of $ 45,000. On December 31, Year 3, Red Rock’s balance sheet showed gross accounts receivable of $ 922,000, and Red Rock’s income statement reported sales of $ 3,000,000. During the year, accounts receivable of $ 35,000 were written off and $ 18,000 were recovered. Based on past experience, 5% of Red Rock’s ending accounts receivable are uncollectible. How much should Red Rock report as bad debt expense on its Year 3 income statement? a. $ 18,100 b. $ 35,000 c. $ 46,100 d. $ 150,000

 

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