Ben Corp grants its customers 30 dyas credit. The company uses the allowance methods for its uncollectible accounts receiveable. During the year, a monthly bad debt accrual is made by multiplying 3.5% times the amount of credit sales for the month. At the fiscal year-end of December 31, an aging of accounts receivable schedule is preapares and the allowance for uncollectible accounts is adjusted accordingly. At the end of 2005, accounts receivable were $850,000 and the allownace has a credit balance of $85,000. Accounts reveivable activity for 2006 was as follows.
- Begining balance $850.000
- Credit sales $3,125.000
- Collections $(2,950.000)
- write offs $(94,000)
- Ending Balance $931,000