Allowance for Doubtful Accounts has a debit balance of $2,500 at the end of the year (before adjustment), and bad debt expense is estimated at 4% of credit sales. If net credit sales are $800,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts is
A) $29,500
B) $34,500
C) $32,000
D) cannot be determined

Question

Quizplus · Accepted Answer

Uncollectible accounts estimate = Credit sales × Bad debts as a percent of credit sales = $800,000 × 0.04 = $32,000

Allowance for Doubtful Accounts Has a Debit Balance of $2,500