On December 31,prior to adjustments,the balance of Accounts Receivable is $26,000 and Allowance for Doubtful Accounts has a debit balance of $300.The firm estimates its losses from uncollectible accounts to be 5% of accounts receivable at the end of the year.The adjusting entry needed to record the estimated losses from uncollectible accounts is made for
A) $1,000.
B) $1,300.
C) $1,600.
D) $300.

Question

Quizplus · Accepted Answer

The estimated uncollectible amount is 5% of $26,000, which is $1,300. Since the Allowance for Doubtful Accounts has a debit balance of $300, the adjusting entry should be $1,300 + $300 = $1,600 to bring the allowance to the correct credit balance.

On December 31,prior to Adjustments,the Balance of Accounts Receivable Is