At December 31, Gill Co. reported accounts receivable of $240,000 and an allowan

Question

At December 31, Gill Co. reported accounts receivable of $240,000 and an allowance for uncollectible accounts of $1,500 (credit). An analysis of accounts receivable suggests that the allowance for uncollectible accounts should be 1% of accounts receivable. The amount of the adjustment for uncollectible accounts would be:

$900.

$1,500.

$2,400.

$610.

At December 31, Gill Co. reported accounts receivable of $240,000 and an allowance for uncollectible accounts of $1,500 (credit). An analysis of accounts receivable suggests that the allowance for uncollectible accounts should be 1% of accounts receivable. The amount of the adjustment for uncollectible accounts would be:

Explanation / Answer

Answer The amount of adjustment for uncollectible accounts would be $900 Working Allowance for uncollectible accounts Debit Credit By balance b/d 1500 By Bad debt (balancing figure) 900 To balance c/f 2400 (1% of $240000) Total 2400 Total 2400

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