Chen Company's account balances at December 31, 2014 for Accounts Receivable and the Allowance for Doubtful Accounts are $480,000 debit and $900 credit. Sales during 2014 were $1,650,000. It is estimated that 1% of sales will be uncollectible. The adjusting entry would include a credit to the allowance account for

Question

Quizplus · Accepted Answer

To calculate the estimated amount of uncollectible accounts, we multiply sales by the estimated percentage: $1,650,000 x 1% = $16,500. This amount should be credited to the allowance account to increase the balance and account for the estimated uncollectible accounts. Therefore, the adjusting entry should include a credit to the allowance account for $16,500.

Chen Company's Account Balances at December 31, 2014 for Accounts