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XYZ Co. had the following sales and accounts receivable balances, prior to any adjustments at year end:

Credit sales                             $10,000,000

Accounts receivable3,000,000

Allowance for uncollectible accounts50,000

XYZ uses3% of accounts receivable to determine its allowance for uncollectible accounts at year end. By what amount should XYZ adjust its allowance for uncollectible accounts at year end?

           A. $0

  B. $40,000

  C. $90,000

D. $140,000

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Question added by Deleted user
Date Posted: 2015/02/15
Akhter Mehmood
by Akhter Mehmood , Station Coordinator at Radio Dhamaal fm94 Sialkot , Global Entertainment Pvt Ltd

Required amount is $90000. Existing allowance is $50000 so there should be an adjustment of additional $40000

Lesley Lanag CMA CPA
by Lesley Lanag CMA CPA , Senior Accountant , Takaful Emarat Insurance (P.S.C)

Answer D

 

the allowance for bad debts should be increased to90,000. adjustment required :40000 credit

Joseph Hayford
by Joseph Hayford , Account Receivable Accountant , Promasidor

The answer is B $40000 because, total uncollectible allowance is $90,000 but alreadly allowed $ 50,000 so we are left with $40,000 to adjust

Khurram Shaukat Memon
by Khurram Shaukat Memon , Academic Research Writer , Freelance Academic Research Writer

Well master answer to your question is (d)

VENKITARAMAN KRISHNA MOORTHY VRINDAVAN
by VENKITARAMAN KRISHNA MOORTHY VRINDAVAN , Project Execution Manager & Accounts Manager , ALI INTERNATIONAL TRADING EST.

Accounts Receivable X3%

Less

The present balance of allowance collectible accounts

= $90,000 - $50,000

= $40,000

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