A firm reported net credit sales of $960,000 for the year and an Accounts Receivable balance of
$120,000 at year-end. Prior to adjustments, Allowance for Doubtful Accounts has a debit balance of $820. 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)$4,800.
B)$5,620.
C)$5,080.
D)$3,980.

Question

Quizplus · Accepted Answer

The entry to record the estimated losses from uncollectible accounts will include a credit to Allowance for Doubtful Accounts for $4,800. This is calculated as follows:Estimated losses from uncollectible accounts = Net credit sales * Estimated percentage of uncollectible accountsEstimated losses from uncollectible accounts = $960,000 * 0.5%Estimated losses from uncollectible accounts = $4,800

A Firm Reported Net Credit Sales of $960,000 for the Year