Question

At December 31, Tremble Music had account balances in Accounts Receivable of $300,000 and in Allowance for Uncollectible Accounts of $1,000 (credit) before any adjustments. An ana sis o Tre bles December 31 accounts receivable suggests that 5% o the account balances are not expected to be collected The balance or Alo a e tor Uncollectible Accounts after adjustment will be:_____. a) $1,000. b) $15,000 c) $16,000 d) $14,000.

Answer 1

The balance of uncollectible accounts after the adjustment will be $15,000

Step-by-step explanation:

On December 31, the balance of the accounts receivable is $300,000 and on same data it is suggested that the 5% of the account receivable will be not be collected.

So, the balance of the uncollectible accounts will be computed as:

Uncollectible accounts = Account receivable balance × % which will not collected

where

Account receivable balance is $300,000

% which will not be collected is 5%

Putting the values above:

= $300,000 × 5%

= $15,000

NOTE: The allowance for uncollectible accounts of $1,000, already credited, so will not be considered again.