The following information is from the 2017 records of Lane Bicycle? Shop: Accoun
ID: 2391476 • Letter: T
Question
The following information is from the 2017 records of Lane Bicycle? Shop:
Accounts? receivable, December? 31, 2017
$ 43,000 (debit)
Allowance for Bad? Debts, December? 31, 2017 prior to adjustment
1,900 (debit)
Net credit sales for 2017
175,000
Accounts written off as uncollectible during 2017
18,000
Cash sales during 2017
29,000
Bad debts expense is estimated by the agingminus?ofminus?receivables method. Management estimates that $8,000 of accounts receivable will be uncollectible. Calculate the ending balance of Allowance for Bad? Debts, after the adjustment for bad debts? expense, at December? 31, 2017.
OPTIONS:
A. 11,800
B. 5,250
C. 8,000
D. 9,000
Please include an explanation, thank you!
Explanation / Answer
C. $8,000
Under the aging-of-receivables method, the Allowance for Bad Debts account is adjusted to the total amount estimated to be uncollectible.
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