The Allowance for doubtful debts currently has a debit balance of $200. The company's management estimates that 2.5% of net credit sales will be uncollectable. Net credit sales are $115 000. What will be the balance of the Allowance for doubtful debts reported on the balance sheet?
A)$3 075
B)$2 675
C)$2 875
D)$3 275

Question

Quizplus · Accepted Answer

The estimated uncollectable amount is 2.5% of $115,000, which is $2,875. Since the Allowance for doubtful debts has a debit balance of $200, the balance on the balance sheet will be $2,875 - $200 = $2,675.

The Allowance for Doubtful Debts Currently Has a Debit Balance