Question: At the beginning of Year 3 Omega Company had a $52,000 balance in its accounts receivable account and a $1,400 balance in allowance for doubtful accounts. During Year 3 Omega experienced the following events.

(1) Omega earned $220,000 of revenue on account.

(2) Collected $230,000 cash from accounts receivable.

(3) Wrote-off $1,000 of accounts receivable as uncollectible.

Omega estimates uncollectible accounts to be 4% of receivables. The December 31, Year 3 ending balance in the allowance for doubtful accounts (balance after expense recognition) is

$1,240.

$2,040.

$1,000.

$1,640.