Allowance for Doubtful Accounts has an unadjusted balance of $400 at the end of the year,and uncollectible accounts expense is estimated at 1% of net sales.If net sales are $300,000,the amount of the adjustment to record the provision for doubtful accounts is
A)$400.
B)$3,400.
C)$3,000.
D)$2,600.

Question

Quizplus · Accepted Answer

To calculate the provision for doubtful accounts, we need to multiply the estimated percentage of uncollectible accounts by net sales. In this case, 1% of net sales of $300,000 is $3,000. Since the unadjusted balance in the allowance for doubtful accounts account is $400, we need to adjust it by adding the provision for doubtful accounts of $3,000. Therefore, the total allowance for doubtful accounts after adjustment will be $3,400 ($400 + $3,000). The correct answer is C) $3,000.

Allowance for Doubtful Accounts Has an Unadjusted Balance of $400