Question

Your business uses the allowance method to account for uncollectible receivables. At the beginning of the year, Allowance for uncollectible accounts had a credit balance of $1,600. During the year you wrote off bad receivables of $2,000 and recorded Bad debt expense of $2,700. What is your year-end balance in Allowance for uncollectible accounts?

A. $2,300

B. $3,600

C. $4,300

D. $2,700

Answer 1

Your year-end balance in Allowance for uncollectible accounts is $2,700. The right answer is D

Explanation:

According to the given data we have the following:

Allowance for uncollectible accounts had a credit balance =$1,600

recorded Bad debt expense =$2,700

written off=$1,600

Therefore, in order to calculate your year-end balance in Allowance for uncollectible accounts we have to make the following calculation:

year-end balance in Allowance for uncollectible​ accounts=Allowance for uncollectible accounts had a credit balance+recorded Bad debt expense- written off

year-end balance in Allowance for uncollectible​ accounts=$1,600+$2,700 -$1,600

year-end balance in Allowance for uncollectible​ accounts=$2,700