At the end of the current year, the trial balance of Aaron's Kitchen Supply Corporation included the accounts and balances shown below. Credit sales were $4,600,000. Returns and allowances on these sales were $27,500. Assume that the firm bases its estimate of the loss from uncollectible accounts on 4 percent of accounts receivable.
Accounts Receivable $ 860,000 Dr.
Allowance for Doubtful Accounts 5,400 Cr.
Sales 7,000,000 Cr.
Sales Returns and Allowances 55,000 Dr.
1. What is the balance in the Allowance for Doubtful Accounts account after the adjusting entry for the estimated loss from uncollectible accounts is posted?
2. What is the amount of the adjusting entry for the estimated loss from uncollectible accounts?

Question

At the end of the current year, the trial balance of Aaron's Kitchen Supply Corporation included the accounts and balances shown below. Credit sales were $4,600,000. Returns and allowances on these sales were $27,500. Assume that the firm bases its estimate of the loss from uncollectible accounts on 4 percent of accounts receivable.
Accounts Receivable $ 860,000 Dr. 
Allowance for Doubtful Accounts 5,400 Cr.
Sales 7,000,000 Cr.
Sales Returns and Allowances 55,000 Dr.
1. What is the balance in the Allowance for Doubtful Accounts account after the adjusting entry for the estimated loss from uncollectible accounts is posted?
2. What is the amount of the adjusting entry for the estimated loss from uncollectible accounts?

Quizplus · Accepted Answer

The Answer of At the end of the current year, the trial balance of Aaron's Kitchen Supply Corporation included the accounts and balances shown below. Credit sales were $4,600,000. Returns and allowances on these sales were $27,500. Assume that the firm bases its estimate of the loss from uncollectible accounts on 4 percent of accounts receivable.
Accounts Receivable $ 860,000 Dr. 
Allowance for Doubtful Accounts 5,400 Cr.
Sales 7,000,000 Cr.
Sales Returns and Allowances 55,000 Dr.
1. What is the balance in the Allowance for Doubtful Accounts account after the adjusting entry for the estimated loss from uncollectible accounts is posted?
2. What is the amount of the adjusting entry for the estimated loss from uncollectible accounts?

At the End of the Current Year, the Trial Balance