A company has total accounts receivable of $500,000 at year-end.It estimates that uncollectible accounts will be 3% of accounts receivable.If Allowance for Doubtful Accounts has a credit balance of $2,000 prior to adjustment, its balance after adjustment will be a credit balance of

Question

Quizplus · Accepted Answer

The estimated uncollectible accounts are 3% of $500,000, which is $15,000. Since there is already a $2,000 credit balance in the Allowance for Doubtful Accounts, the adjustment needed is $13,000 to reach the desired $15,000 balance.

A Company Has Total Accounts Receivable of $500,000 at Year-End