A firm reported net credit sales of $355,000 for the year and an Accounts Receivable balance of
$20,000 at year-end. Prior to adjustments, Allowance for Doubtful Accounts has a debit balance of
$250. The firm estimates its losses from uncollectible accounts to be one-half of 1 percent of net credit sales. The entry to record the estimated losses from uncollectible accounts will include a credit to Allowance for Doubtful Accounts for
A)$1,775.
B)$2,025.
C)$1,525.
D)$3,550.

Question

Quizplus · Accepted Answer

The estimated losses from uncollectible accounts are calculated as 0.5% of net credit sales: $355,000 * 0.005 = $1,775. This amount is credited to the Allowance for Doubtful Accounts.

A Firm Reported Net Credit Sales of $355,000 for the Year