A company has $97,000 in outstanding accounts receivable and it uses the allowan
ID: 1208357 • Letter: A
Question
A company has $97,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts. Experience suggests that 3% of outstanding receivables are uncollectible. The current balance (before adjustments) in the allowance for doubtful accounts is an $870 debit. The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for:
$2,040
$2,910
$3,780
$870
None of these
A company has $97,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts. Experience suggests that 3% of outstanding receivables are uncollectible. The current balance (before adjustments) in the allowance for doubtful accounts is an $870 debit. The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for:
$2,040
$2,910
$3,780
$870
None of these
Explanation / Answer
$2,040
The journal entry to record the adjustment to the allowance account includes a debit to Bad Debts Expense for
= received money wrote off as uncollectable - allowance
= 0.03*97,000 - 870
= 2,910 - 870
= 2,040
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.