A firm reported sales of $300,000 during the year and has a balance of $20,000 in its Accounts Receivable account at year-end. Prior to adjustment, Allowance for Doubtful Accounts has a credit balance of $300. The firm estimated its losses from uncollectible accounts to be one-half of 1 percent of sales. The entry to record the estimated losses from uncollectible accounts will include a credit to Allowance for Doubtful Accounts forA) $1,200B) $1,500C) $1,800D) $3,0008.

Question

Audrina Noble

Business

29 January, 15:11

A firm reported sales of $300,000 during the year and has a balance of $20,000 in its Accounts Receivable account at year-end. Prior to adjustment, Allowance for Doubtful Accounts has a credit balance of $300. The firm estimated its losses from uncollectible accounts to be one-half of 1 percent of sales. The entry to record the estimated losses from uncollectible accounts will include a credit to Allowance for Doubtful Accounts forA) $1,200B) $1,500C) $1,800D) $3,0008.

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Answers (1)

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Jordin Cannon · Answer 1

A) $ 1,200

Explanation:

The firm has estimated that one half of one percent of credit sales is uncollectible.

Total credit sales $ 300,000

Estimated uncollectible accounts 0.5 %

Allowance for uncollectible accounts balance

$ 300,000 * 0.5 % $ 1,500

Available balance in allowance for uncollectible account $ 300

Additional amount to be recorded in allowance account $ 1,200