Use this information to answer the following question. The general ledger account for Accounts Receivable shows a debit balance of $100,000.Allowance for Uncollectible Accounts has a credit balance of $2,000.Net sales for the year were $1,000,000.In the past,2 percent of sales have proved uncollectible,and an aging of accounts receivable accounts results in an estimate of $27,000 of uncollectible accounts.
Using the accounts receivable aging method,the Allowance for Uncollectible Accounts balance (after adjustment)would be

Question

Quizplus · Accepted Answer

To calculate the desired balance of Allowance for Uncollectible Accounts, we need to find the estimated amount of uncollectible accounts through aging method. The information given in the problem states that the past experience indicates a 2% rate of uncollectible sales, and net sales for the year were $1,000,000. This means that 2% of $1,000,000, or $20,000, is the estimated amount of uncollectible accounts. Additionally, the aging of accounts receivable results in an estimate of $27,000 of uncollectible accounts. 
Therefore, the desired balance in the Allowance for Uncollectible Accounts is the sum of both estimates: $20,000 + $27,000 = $47,000. 
Currently, the Allowance for Uncollectible Accounts has a credit balance of $2,000. Therefore, we need to increase it by $45,000 ($47,000-$2,000) to reach the desired balance. 
So, the Allowance for Uncollectible Accounts balance (after adjustment) would be $2,000 + $45,000 = $27,000. 
Hence, the correct option is C.

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