The general ledger account for Accounts Receivable shows a debit balance of $50,000.Allowance for Uncollectible Accounts has a credit balance of $3,000.Net sales for the year were $500,000.In the past,3 percent of sales have proved uncollectible,and an aging of accounts receivable resulted in an estimate of $20,000 of uncollectible accounts receivable.
-Using the accounts receivable aging method,the Allowance for Uncollectible Accounts balance (after adjustment)would be
A)$17,000.
B)$20,000.
C)$21,500.
D)$23,000.

Question

The general ledger account for Accounts Receivable shows a debit balance of $50,000.Allowance for Uncollectible Accounts has a credit balance of $3,000.Net sales for the year were $500,000.In the past,3 percent of sales have proved uncollectible,and an aging of accounts receivable resulted in an estimate of $20,000 of uncollectible accounts receivable. 
-Using the accounts receivable aging method,the Allowance for Uncollectible Accounts balance (after adjustment)would be
A)$17,000.
B)$20,000.
C)$21,500.
D)$23,000.

Quizplus · Accepted Answer

The accounts receivable aging method focuses on the estimated uncollectible accounts receivable, which is $20,000 in this scenario. This method adjusts the Allowance for Uncollectible Accounts to reflect this estimate directly, regardless of the current balance in the allowance account. Therefore, the adjusted balance in the Allowance for Uncollectible Accounts would be $20,000.

The General Ledger Account for Accounts Receivable Shows a Debit