Ariel Inc.uses the allowance method of accounting for uncollectible accounts receivable and estimates that 2% of the credit sales of $1,650,000 for the year ended will be uncollectible.Allowance for Doubtful Accounts has a negative unadjusted balance of $(1,600) at the end of the year.Determine the amount of the adjustment to record the provision for doubtful accounts.
A) $33,000
B) $31,400
C) $34,600
D) $30,000

Question

Quizplus · Accepted Answer

The adjustment is calculated as 2% of $1,650,000, which equals $33,000. The unadjusted balance of $(1,600) does not affect the calculation of the provision for the current year.

Ariel IncUses the Allowance Method of Accounting for Uncollectible Accounts Receivable