In February, one of Team Shirts\' best customers went bankrupt owing team shirts
ID: 2505619 • Letter: I
Question
In February, one of Team Shirts' best customers went bankrupt owing team shirts $85. Team shirts uses the sales method for estimating bad debts. February sales were $15,000. The accountant has been using 3% of sales as the estimated bad debts percentage. Before adjustment and the write- off, the balance in the allowance for uncollectable accounts was $(100). After the write- off and adjustment, the balance in the allowance for uncollectible accounts should be:
A. $365
B. $450
C. $465
D. $550
Explanation / Answer
allowance for uncoolectable = (15000 * 0.03) -85 + 100 = 465