The Tanner Company has provided the following information after year-end adjustments: • Allowance for doubtful accounts increased $19,000.
• Accounts receivable increased $390,000 during the year.
• Accounts written off as uncollectible totaled $20,000.
• Sales totaled $2,500,000.
• Sales discounts were $100,000.
What was the amount of Tanner's net sales?
A)$1,990,000.
B)$2,380,000.
C)$2,400,000.
D)$2,420,000.

Question

Quizplus · Accepted Answer

Net sales is calculated by subtracting sales discounts and allowances from total sales. 
Total sales = $2,500,000 
Sales discounts = $100,000 
Allowance for doubtful accounts increased by $19,000, which means $19,000 worth of sales were expected to be uncollectible. 
Accounts written off were $20,000, which means $20,000 worth of sales were actually uncollectible. 
Therefore, the allowance for doubtful accounts balance after adjustments is $19,000 - $20,000 = -$1,000 (credit balance). 
Since the allowance account has a credit balance, it needs to be added to net sales. 
Net sales = $2,500,000 - $100,000 + $1,000 = $2,400,000.

The Tanner Company Has Provided the Following Information After Year-End