Table 9-10 Armadillo Camera Shop
The following information is from the 2019 records of Armadillo Camera Shop:
$$\begin{array} { | l | r | }
\hline \text { Accounts receivable, December 31,2019 } & \$ 20,000 \text { (debit) } \
\hline \text { Allowance for doubtful accounts, December } & \
31,2019 , \text { prior to adjustment } & 600 ( \text { debit) } \
\hline \text { Net credit sales for 2019 } & 95,000 \
\hline \text { Accounts written off as uncollectible } & \
\text { during 2019 } &7,000 \
\hline \text { Cash sales during 2019 } & \text { } 27,000 \
\hline
\end{array}$$
-Refer to Table 9-10. Bad debts expense is estimated by the percent-of-sales method. Management estimates that 3% of net credit sales will be uncollectible. Which of the following will be the amount of net accounts receivable after adjustment?
A)$16,550
B)$17,750
C)$17,150
D)$13,000

Question

Table 9-10 Armadillo Camera Shop
The following information is from the 2019 records of Armadillo Camera Shop:
 $$\begin{array} { | l | r | } 
\hline \text { Accounts receivable, December 31,2019 } & \$ 20,000 \text { (debit) } \
\hline \text { Allowance for doubtful accounts, December } & \
31,2019 , \text { prior to adjustment } & 600 ( \text { debit) } \
\hline \text { Net credit sales for 2019 } & 95,000 \
\hline \text { Accounts written off as uncollectible } & \
 \text { during 2019 } &7,000   \
\hline \text { Cash sales during 2019 } & \text { } 27,000 \
\hline
\end{array}$$
-Refer to Table 9-10. Bad debts expense is estimated by the percent-of-sales method. Management estimates that 3% of net credit sales will be uncollectible. Which of the following will be the amount of net accounts receivable after adjustment?
A)$16,550
B)$17,750
C)$17,150
D)$13,000

Quizplus · Accepted Answer

The bad debts expense is estimated as 3% of net credit sales, which is 3% of $95,000 = $2,850. The Allowance for Doubtful Accounts, before adjustment, has a debit balance of $600. After recognizing the bad debts expense of $2,850, the adjusted balance in the Allowance for Doubtful Accounts will be $2,850 - $600 = $2,250 (credit). The net accounts receivable after adjustment is calculated as Accounts Receivable minus the adjusted Allowance for Doubtful Accounts: $20,000 - $2,250 = $17,750.

Table 9-10 Armadillo Camera Shop the Following Information Is from the 2019

Table 9-10 Armadillo Camera Shop
the Following Information Is from the 2019