Chez Fred Bakery Estimates the Allowance for Uncollectible Accounts at 3

Chez Fred Bakery estimates the allowance for uncollectible accounts at 3% of the ending balance of accounts receivable. During 2018, Chez Fred's credit sales and collections were $125,000 and $131,000, respectively. What was the balance of accounts receivable on January 1, 2018, if $180 in accounts receivable were written off during 2018 and if the allowance account had a balance of $750 on December 31, 2018?

A) $5,820.
B) $31,000.
C) $31,180.
D) None of these answer choices are correct.

Correct Answer:

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