A company has an ending accounts receivable balance of $900,000 and it estimates that uncollectible accounts will be 2% of the receivable balance. If Allowance for Doubtful Accounts has a credit balance of $2,000 prior to adjustment, its balance after adjustment will be a credit of
A) $20,000.
B) $18,000.
C) $17,960.
D) $16,000.

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 $2,000, so after adjustment, it will be $18,000.

A Company Has an Ending Accounts Receivable Balance of $900,000