Piper, Inc. had credit sales for the period of $85,000. The balance in Allowance for Doubtful Accounts is a debit of $857. What is the credit to Allowance for Doubtful Accounts if Piper uses the aging method to estimate uncollectible accounts and an aging of Accounts Receivable reflected an estimated amount of uncollectible accounts of $6,382?

Question

Quizplus · Accepted Answer

Using the aging method, the credit to Allowance for Doubtful Accounts would be the estimated amount of uncollectible accounts ($6,382). 
To determine the required adjustment to the allowance, we need to calculate the balance required in the allowance account based on the aging analysis. 
If the estimated uncollectible amount is $6,382 and the balance in Allowance for Doubtful Accounts is currently a debit of $857, we can calculate the required credit adjustment as:
Required credit adjustment = Estimated uncollectible amount - Current balance in allowance account
Required credit adjustment = $6,382 - (-$857) = $7,239 
Therefore, the credit to Allowance for Doubtful Accounts is $7,239. 
Option A is the correct choice.