Question

Using the aging-of-accounts-receivable method, you estimate that total uncollectible accounts are $3,800. The Allowance for Uncollectible Accounts prior to adjustment has a debit balance of $1,100. The amount of the adjusting entry should be:

a) $2,700
b) $4,900
c) $1,100
d) $3,800

Answer 1

The adjusting entry required when using the aging-of-accounts-receivable method to estimate uncollectible accounts at $3,800, with an existing debit balance of $1,100 in the Allowance for Uncollectible Accounts, is b)$4,900.

Step-by-step explanation:

The aging-of-accounts-receivable method is used to estimate uncollectible accounts based on the age of each account receivable.

If the total estimated uncollectible accounts are $3,800 and the current Allowance for Uncollectible Accounts has a debit balance of $1,100, an adjusting entry is needed to both eliminate this debit balance and to adjust the allowance to the newly estimated amount.

To find the required adjusting entry, we would add the existing debit balance to the estimated total uncollectible accounts.

The calculation is as follows:

• Estimated Uncollectible Accounts: $3,800
• Current Allowance with Debit Balance: $1,100
• Adjusting Entry Required: $3,800 + $1,100 = $4,900

Therefore, the amount of the adjusting entry should be $4,900, which is option b).