Question

At December 31, Gill Co. reported accounts receivable of $288,000 and an allowance for uncollectible accounts of $1,500 (credit) before any adjustments. An analysis of accounts receivable suggests that the allowance for uncollectible accounts should be 1% of accounts receivable. The amount of the adjustment for uncollectible accounts would be:

Answer 1

Answer:

$1,380

Explanation:

Given that;

Accounts receivables = $288,000

Allowance for uncollectible accounts = $1,500 (credit balance)

Allowance should be 1% of accounts receivables = $288,000 × 1% = 2,880

Then, the adjustment = $2,880 - $1,500 = $1,380

Therefore, the amount of the adjustment for uncollectible accounts would be $1,380