Question

The following information pertains to Oro Corp.: Credit sales for the year ended December 31 $450,000 Credit balance in allowance for uncollectible accounts at January 1 10,800 Bad debts written off during the year 18,000 According to past experience, 3% of Oro’s credit sales have been uncollectible. After provision is made for bad debt expense for the year ended December 31, the allowance for uncollectible accounts balance would beA. $6,300
B. $13,500
C. $24,300
D. $31,500

Answer 1

Answer:

A. $6,300

Explanation:

The computation of the ending balance of uncollectible account is shown below:

= Opening balance of the uncollectible accounts + uncollected amount - bad debt written off

where,

uncollected amount = Credit sales × given percentage

                                  = $450,000 × 3%

                                  = $13,500

The other item values would remain the same

Now put these values to the above formula  

So, the value would equal to

= $10,800 + $13,500 - $18,000

= $6,300