At the start of the current year,Minuteman Corporation had a credit balance in the Allowance for Doubtful Accounts of $1,800.During the year a monthly provision of 2% of sales was made for uncollectible accounts.Sales for the year were $600,000,and $5,600 of accounts receivable were written off as worthless.No recoveries of accounts previously written off were made during the year.The year-end financial statements should show:
A)Uncollectible accounts expense of $13,800.
B)Allowance for Doubtful Accounts with a credit balance of $8,200.
C)Allowance for Doubtful Accounts with a credit balance of $6,400.
D)Uncollectible accounts expense of $5,600.

Question

Quizplus · Accepted Answer

The beginning balance in the Allowance for Doubtful Accounts was $1,800. During the year, a monthly provision of 2% of sales was made for uncollectible accounts. Sales for the year were $600,000, so the provision for uncollectible accounts was $12,000 (2% x $600,000). $5,600 of accounts receivable were written off as worthless during the year. The ending balance in the Allowance for Doubtful Accounts is $8,200 ($1,800 + $12,000 - $5,600).

At the Start of the Current Year,Minuteman Corporation Had a Credit