McKensie Company's Accounts Receivable balance at December 31 was $100,000, and there was a negative balance of $600 in the Allowance for Uncollectible Accounts. The firm estimates that 3% of the Accounts Receivable will prove to be uncollectible.
After the appropriate adjusting entry is made for credit losses, what is the net amount of accounts receivable included in the current assets at year-end?

Question

Quizplus · Accepted Answer

The estimated uncollectible amount is 3% of $100,000, which is $3,000. The Allowance for Uncollectible Accounts needs to be adjusted from a negative $600 to a positive $3,000, requiring an adjustment of $3,600. The net accounts receivable is $100,000 - $3,000 = $97,000.

McKensie Company's Accounts Receivable Balance at December 31 Was $100,000