Final exam 8-10 PM Saved a Produce estimates bad debt expense at 0.40% of credit

Question

Final exam 8-10 PM Saved a Produce estimates bad debt expense at 0.40% of credit sales. The stog reported accounts receivable and allowance for uncollectible accounts of $485,000 $1,540 respectively, at December 31, 2015. During 2016, Calistoga's credit sales and collections were $332,000 and $316,000, respectively, and $1,790 in accounts receivable were written off 0025.58 Calistoga's adjusted allowance for uncollectible accounts at December 31, 2016, Multiple Choice $983 $1,078 $1,963 $1,728 0

Explanation / Answer

Correct answer is option B.$1078

Calculation of adjusted allowance for Uncollectible accounts

Estimated bad debt expenses for 2016 =$3,32,000*.4%=$1328

Opening balance of Allowance - $1540

(-) Written off during the year - ($1790)

Balance as on 31.12.2016 ($250)

So  adjusted allowance for Uncollectible accounts,

=1328+(250)=$1078

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