On December 31, 2019, prior to adjustments, Accounts Receivable has a debit balance of $370,000 and the Allowance for Doubtful Accounts has a credit balance of $800. The firm estimates its losses from uncollectible accounts to be 3% of accounts receivable at the end of the year. The amount to be reported as Uncollectible Accounts Expense on the income statement for the year ending December 31, 2019, is
A)$10,300
B)$12,700
C)$11,100
D)$11,900

Question

Quizplus · Accepted Answer

The estimated losses from uncollectible accounts are 3% of $370,000, which equals $11,100. Since the Allowance for Doubtful Accounts already has a credit balance of $800, the additional amount needed to adjust the allowance to the estimated total of $11,100 is $11,100 - $800 = $10,300. This is the amount that should be reported as Uncollectible Accounts Expense.

On December 31, 2019, Prior to Adjustments, Accounts Receivable Has