At the beginning of the year, the balance in Allowance for Doubtful Accounts is a credit of $760. During the year, previously written off accounts of $120 are reinstated and accounts totaling $740 are written off as uncollectible. The end-of-year balance (before adjustment) in Allowance for Doubtful Accounts should be
A) $760
B) $120
C) $140
D) $740

Question

Quizplus · Accepted Answer

- The beginning of the year balance in Allowance for Doubtful Accounts is a credit of $760 
- Previously written off accounts of $120 are reinstated, which means they are no longer considered uncollectible and should be added back to the allowance balance. This increases the allowance balance by $120 (Debit to Allowance account) 
- Accounts totaling $740 are written off as uncollectible. This means they are removed from the balance sheet, and the allowance account should be reduced by the same amount (Credit to Allowance account) 
- Therefore, the end-of-year balance (before adjustment) in Allowance for Doubtful Accounts should be: 
Beginning balance ($760) + Reinstated accounts ($120) - Written off accounts ($740) = $140

At the Beginning of the Year, the Balance in Allowance