Question

An estimate based on an analysis of receivables shows that $790 of accounts receivables are uncollectible. The Allowance for Doubtful Accounts has a debit balance of $120. The adjusting entry at the end of the year will include a credit to Allowance for Doubtful Accounts in the amount of?

Answer 1

$910

Step-by-step explanation:

An allowance for doubtful debts generally has a credit balance against the debit balance of accounts receivables.

In the current circumstance the balance of allowance is debit, first it need to be reciprocated for which it will be credited by the same = $120 cr.

Further, after this the balance will be 0 in the allowance account.

The closing balance shall be $790 cr.

Accordingly an entry shall be made to provide for credit of $790.

Thus, total credit in the current period in the account = $120 + $790 = $910