A company has $275,000 in credit sales. The company uses the allowance method to account for uncollectible accounts. The Allowance for Doubtful Accounts now has a $7,550 credit balance. If the company estimates 5% of credit sales will be uncollectible, what will be the amount of the journal entry to record estimated uncollectible accounts?

Question

Quizplus · Accepted Answer

The estimated uncollectible accounts are calculated as 5% of $275,000 in credit sales, which equals $13,750. This is the amount of the journal entry needed to adjust the Allowance for Doubtful Accounts to the estimated uncollectible amount.

A Company Has $275,000 in Credit Sales