The following information is from the 2013 records of Armadillo Camera Shop: $$\begin{array} { | l | r | }
\hline \text { Accounts receivable, December 31,2013 } & \$ 20,000 \text { (debit) } \
\hline \begin{array} { l }
\text { Allowance for uncollectible accounts, December 31,2013 } \
\text { prior to adjustment }
\end{array} & 600 \text { (debit) } \
\hline \text { Net credit sales for 2013 } & 95,000 \
\hline \text { Accounts written off as uncollectible during 2013 } & 7,000 \
\hline \text { Cash sales during 2013 } & 27,000 \
\hline
\end{array}$$
- Uncollectible accounts expense is estimated by the aging-of-accounts-receivable method.Management estimates that $2,850 of accounts receivable will be uncollectible.Which of the following will be the balance of the Allowance for uncollectible accounts after adjustment?
A) $2,850
B) $3,450
C) $7,000
D) $2,250

Question

The following information is from the 2013 records of Armadillo Camera Shop: $$\begin{array} { | l | r | } 
\hline \text { Accounts receivable, December 31,2013 } & \$ 20,000 \text { (debit) } \
\hline \begin{array} { l } 
\text { Allowance for uncollectible accounts, December 31,2013 } \
\text { prior to adjustment }
\end{array} & 600 \text { (debit) } \
\hline \text { Net credit sales for 2013 } & 95,000 \
\hline \text { Accounts written off as uncollectible during 2013 } & 7,000 \
\hline \text { Cash sales during 2013 } & 27,000 \
\hline
\end{array}$$
- Uncollectible accounts expense is estimated by the aging-of-accounts-receivable method.Management estimates that $2,850 of accounts receivable will be uncollectible.Which of the following will be the balance of the Allowance for uncollectible accounts after adjustment?
A) $2,850
B) $3,450
C) $7,000
D) $2,250

Quizplus · Accepted Answer

The allowance for uncollectible accounts is increased by the amount of uncollectible accounts expense. The uncollectible accounts expense is estimated to be $2,850. Therefore, the allowance for uncollectible accounts will be increased by $2,850. The original balance of the allowance for uncollectible accounts was $600. Therefore, the new balance of the allowance for uncollectible accounts will be $2,850 + $600 = $3,450.

The Following Information Is from the 2013 Records of Armadillo