Question

Allowance for Doubtful Accounts has a credit balance of $500 at the end of the year (before adjustment), and uncollectible accounts expense is estimated at 2% of sales. If sales are $600,000, the amount of the adjusting entry to record the provision for doubtful accounts is:______.a. $12,500.b. $11,500.c. $12,000.d. None of these answers are correct.

Answer 1

$12,000

Step-by-step explanation:

Calculation to determine what the amount of the adjusting entry to record the provision for doubtful accounts is

Using this formula

Provision for doubtful accounts =Sales *Uncollectible accounts expense estimated percentage of sales

Let plug in the formula

Provision for doubtful accounts = 2% × $600,000

Provision for doubtful accounts=$12,000

Therefore the amount of the adjusting entry to record the provision for doubtful accounts is $12,000