Question

At December 31, Gill Co. reported accounts receivable of $268,000 and an allowance for uncollectible accounts of $750 (credit) before any adjustments. An analysis of accounts receivable suggests that the allowance for uncollectible accounts should be 2% of accounts receivable. The amount of the adjustment for uncollectible accounts would be:_______

Answer 1

: $4,610

Step-by-step explanation:

The allowance for uncollectible accounts should be 2% of accounts receivable. So first we wil find out the 2% of $268,000.

($268,000 x 2%) = $5,360

Then we will subtract the $750 allowance for uncollectible accounts before any adjustments.

$5,360 - $750 = $4,610

The amount of the adjusting entry for uncollectible accounts would be: $4,610.