Allowance for Doubtful Accounts has a credit balance of $500 at the end of the year (before adjustment), and bad debt expense is estimated at 3% of credit sales. If credit sales are $300,000, the amount of the adjusting entry to record the estimated uncollectible accounts receivable is
A) $8,500
B) $9,500
C) $9,000
D) Cannot be determined

Question

Quizplus · Accepted Answer

Uncollectible accounts estimate = Credit sales × Bad debt as a percent of credit sales = $300,000 × 0.03 = $9,000

Allowance for Doubtful Accounts Has a Credit Balance of $500