Question

A company has net credit sales of $750,000 for the year and it estimates that uncollectible accounts will be 2% of sales. If Allowance for Doubtful Accounts has a credit balance of $2,000 prior to adjustment, its balance after adjustment will be a credit of:_______.

Answer 1

the balance after adjustment would be a credit of $17,000

Step-by-step explanation:

The computation of the balance after adjustment is shown below:

= Uncollectible amount + credit balance of allowance for doubtful debts

= $750,000 × 2% + $2,000

= $15,000 + $2,000

= $17,000

Hence, the balance after adjustment would be a credit of $17,000

We simply applied the above formula so that the correct value could come

And, the same is to be considered