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gizmo_the_mogwai [7]
3 years ago
13

Concord Corporation has outstanding accounts receivable totaling $1.29 million as of December 31 and sales on credit during the

year of $6.30 million. There is also a debit balance of $6100 in the allowance for doubtful accounts. If the company estimates that 2% of its accounts receivable will be uncollectible, what will be the balance in the allowance for doubtful accounts after the year-end adjustment to record bad debt expense?
a. $25678.
b. $25800.
c. $19700.
d. $31900.
Business
2 answers:
olga nikolaevna [1]3 years ago
4 0

Answer:

Balance of uncollectible accounts    - $ 25,800

Explanation:

Computation of Bad debts expense

The allowance of uncollectible accounts are calculated as a percentage of outstanding receivables.

Accounts receivable  balance                                                $ 1,290,000

Percentage estimated to be uncollectible                                       2 %

Estimated balance of uncollectible accounts                     $     25,800

The balance in the uncollectible account shall be 2 % of receivable i.e $ 25,800.

The adjustment entry shall be debited at $ 31,900, being the balance amount plus the debit balance in the allowance account prior to adjustment.

strojnjashka [21]3 years ago
3 0

Answer:

Concord Corporation has outstanding accounts receivable totaling $1.29 million as of December 31 and sales on credit during the year of $6.30 million. There is also a debit balance of $6100 in the allowance for doubtful accounts. If the company estimates that 2% of its accounts receivable will be uncollectible, the balance in the allowance for doubtful accounts after the year-end adjustment to record bad debt expense will be  $25800 - option B.

Explanation:

Estimated uncollectible = 2% of account receivables

Allowance account’s adjusted balance must be the same as estimated uncollectible balance.

Therefore, the adjusted Allowance for Doubtful Account = $1.29 millions x 2%

= $1.29*0.02

The adjusted Allowance for Doubtful Account  = $ 0.0258 millions or $ 25,800.

Therefore, the correct answer is $ 25,800 - option B.

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The December 31, 2021, unadjusted trial balance for Demon Deacons Corporation is presented below.
Arlecino [84]

Answer:

Date   Accounts Titles & Explanation  Debit  Credit

Dec 31    Rent Expense                          $2,040

               ($6,120 *2/6)

                      Prepaid Rent                       $2,040

Dec 31     Deferred Revenue                 $525

                      Service Revenue                           $525

Dec 31    Salaries Expense                     $700

                      Salaries Payable                           $700

Dec 31     Supplies Expense                  $2,390

                ($3,100 - $710)

                      Supplies                                       $2,390

       

              Demon Deacons Corporation

                 Adjusted Trial balance

                  December 31, 2021

         Accounts             Debit$        Credit$

Cash                               9,100

Account receivable       14,100

Prepaid rent                   4080

Supplies                          710

Deferred revenue                               1,575

Salaries payable                                  700

Common stock                                    11,000

Retain earnings                                   5,100

Service revenue                                 45,245

Salaries expenses          31,200

Rent expenses                2,040

Supplies expenses         <u>2,390</u>          <u>              </u>

Total                                $<u>63,620</u>     $<u>63,620</u>

Prepaid rent = 6,120 - 2,040 =  4080

Supplies = 3100 - 2390 = 710

Deferred revenue = 2,100 - 525 = 1575

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