Emerz Corporation had sales of $850,000, of which 20% were cash sales. As of yea
ID: 2456526 • Letter: E
Question
Emerz Corporation had sales of $850,000, of which 20% were cash sales. As of year-end, the balance in the Allowance for Uncollectible Accounts before adjusting for bad debts was a $400 debit. The company estimates bad debts as 10% of ending accounts receivable or 1.5% of credit sales. What is the balance in the Allowance for Uncollectible Accounts after Emerz Corporation estimates bad debts using a percentage of credit sales?
a. $9,800
b. $10,200
c. $10,600
d. $12,350
e. $12,750
a. $9,800
b. $10,200
c. $10,600
d. $12,350
e. $12,750
Explanation / Answer
Total Sales= 850,000
Total Credit sales (80% of the sales)= 680,000
Total Allowance for Uncollectible Accounts (1.5%of credit sales)=10,200
Already accounted = 400
Balance=$9,800
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