Question

Marr Co. had the following sales and accounts receivable balances, prior to any adjustments at year end: Credit sales $10,000,000 Accounts receivable 3,000,000 Allowance for uncollectible accounts (debit balance) 50,000 Marr uses 3% of accounts receivable to determine its allowance for uncollectible accounts at year end. By what amount should Marr adjust its allowance for uncollectible accounts at year end

Answer 1

$140,000

Step-by-step explanation:

The computation is shown below:

Ending allowance for uncollectible accounts is

= Accounts receivable × Given percentage

= $3,000,000 × 3%

= $90,000

Now the

Adjusted balance is

= Ending allowance for uncollectible accounts + debit balance of Allowance for uncollectible accounts

= $90,000 + $50,000

= $140,000