Answer is A. Any help in how to get that answer would be awesome! Smith and Sons
ID: 2519628 • Letter: A
Question
Answer is A. Any help in how to get that answer would be awesome!
Smith and Sons reported $2,000,000 of credit sales in 2012. Accounts receivable at the end of 2012 is $1,500,000. The balance in the allowance for doubtful accounts was $100,000 at the beginning of 2012. Smith and Sons estimates uncollectible accounts receivable to amount to 6% of credit sales. Assuming write-offs of $30,000, what is the balance in the allowance for doubtful accounts at the end of 2012? A) S190,000 B) S90,000 C) S120,000 D) S220,000 18.Explanation / Answer
Allowance for uncollectible for the year = 2,000,000 * 6% = 120,000
When Accounts receivable are written off, allowance for doubtful accounts is debited and accounts receivable is credited. So the writeoff reduces allowance for uncollectible.
Beginning balance in allowance for doubtful accounts 100,000 Allowance for uncollectible for the year 120,000 Accounts receivable written off in the year (30,000) Ending balnce in allowance for doubtful accounts 190,000