A company has net credit sales of $900,000 for the year and it estimates that uncollectible accounts will be 2% of sales. If Allowance for Doubtful Accounts has a credit balance of $1,000 prior to adjustment, its balance after adjustment will be a credit of
A) $18,000.
B) $19,000.
C) $17,980.
D) $17,000.

Question

Quizplus · Accepted Answer

The estimated uncollectible accounts are 2% of $900,000, which is $18,000. The Allowance for Doubtful Accounts already has a credit balance of $1,000, so after adjustment, it will be $18,000 + $1,000 = $19,000.

A Company Has Net Credit Sales of $900,000 for the Year