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How is the answer B? 38. The following information...

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Accounting

How is the answer B?

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38. The following information relates to the operations of Johnson, Inc.: Accounts Receivable, gross on 12/31/2014 Accounts Receivable, gross on 12/31/2013 Allowance for Doubtful Accounts on 12/31/2013 $200,000 $180,000 $ 8,000 During 2014 Sales Revenue : $4,000,000: 75% of all sales are made on account. A/R written off $115,000 Assume Johnson uses the percentage of credit sales (i.e., income statement) approach to calculate bad debt expense and allowance for doubtful accounts. The controller estimates that the firm will not collect 4% of 2014 sales made on account. What is the firm's allowance for doubtful accounts balance as of 12/31/2014: A) $ 3,000 B) 13,000 C) $120,000 D) $123,000

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