On December 31,2016,prior to adjustments,Accounts Receivable has a debit balance of $356,000 and the Allowance for Doubtful Accounts has a credit balance of $1,200.The firm estimates its losses from uncollectible accounts to be 4% of accounts receivable at the end of the year.The balance in the Allowance for Doubtful Accounts after the adjusting entry for the estimated losses from uncollectible accounts is:
A) $13,040
B) $14,240
C) $15,440
D) $17,800

Question

Quizplus · Accepted Answer

The estimated uncollectible amount is 4% of $356,000, which is $14,240. The existing credit balance in the Allowance for Doubtful Accounts is $1,200. Therefore, the adjusting entry needed is $14,240 - $1,200 = $13,040. After the adjustment, the balance in the Allowance for Doubtful Accounts will be $14,240.

On December 31,2016,prior to Adjustments,Accounts Receivable Has a Debit Balance