Allowance for doubtful accounts problem


A firm reported net credit sales of $225,000 during the year and has a balance of $20,000 in its Accounts Receivable account at year-end. Prior to adjustment, Allowance for Doubtful Accounts has a credit balance of $100. The firm estimated its losses from uncollectible accounts to be one-half of 1 percent of sales. The entry to record the estimated losses from uncollectible accounts will include a credit to Allowance for Doubtful Accounts for:

A) $1,225

B) $1,125

C) $ 900

D) $2,250

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Accounting Basics: Allowance for doubtful accounts problem
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