The following information is from the records of Armadillo Camera Shop: $$\begin{array} { | l | r | }
\hline \text { Accounts receivable, December } 31,2015 & \$ 20,000 \text { (debit) } \
\hline \text { Allowance for Bad Debts, December 31,2015 } & \
\hline \text { prior to adjustment } & 600 \text { (debit) } \
\hline \text { Net credit sales for 2015 } &95,000 \
\hline \text { Accounts written off as uncollectible during 2015 } & 350 \
\hline
\end{array}$$ Bad debts expense is estimated by the aging-of-accounts-receivables method. Management estimates that $2,850 of accounts receivable will be uncollectible. Calculate the amount of net accounts receivable after the adjustment for bad debts.

Question

The following information is from the records of Armadillo Camera Shop: $$\begin{array} { | l | r | } 
\hline \text { Accounts receivable, December } 31,2015 & \$ 20,000 \text { (debit) } \
\hline \text { Allowance for Bad Debts, December 31,2015 } & \
\hline \text { prior to adjustment } &  600 \text { (debit) } \
\hline \text { Net credit sales for 2015 } &95,000 \
\hline \text { Accounts written off as uncollectible during 2015 } & 350 \
\hline
\end{array}$$ Bad debts expense is estimated by the aging-of-accounts-receivables method. Management estimates that $2,850 of accounts receivable will be uncollectible. Calculate the amount of net accounts receivable after the adjustment for bad debts.

Quizplus · Accepted Answer

First, we need to calculate the ending balance for the allowance for bad debts:

Prior to adjustment: $600 (debit) 
Bad debts expense: $2,850 
Total allowance for bad debts: $3,450 (credit)

Then, we can calculate the net accounts receivable:

Accounts receivable, December 31, 2015: $20,000 (debit) 
Allowance for bad debts, December 31, 2015: $3,450 (credit) 
Net accounts receivable: $16,550 (debit)

Therefore, the correct answer is (B) $17,150.

The Following Information Is from the Records of Armadillo Camera