At the beginning of the year, Robert Company\'s Allowance for Doubtful Accounts

Question

At the beginning of the year, Robert Company's Allowance for Doubtful Accounts had a $3,200 credit balance. During January, a provision of 2% of sales was made for uncollected accounts expense,. During January, sales totaled $350,000 and $2,900 of accounts receivable were written off as worthless. No recoveries of accounts previously written off were made during the month. Robert's financial statements for January show: A- allowance for doubtful accounts with a credit balance of $10,200 B- Allowance for doubtful accounts with a credit balance of $7,300 C- Uncollectible accounts expense of 9,900 D- uncollectible accounts expense of $4,100

Explanation / Answer

Credit balance for January

= beginning Allowance of Doubtful debts credit balance + total sales x % of Provision on sales – A/R written off

= $ 3,200 + (350,000 x 2%) -$ 2,900

= $ 3,200 +$ 7,000-$2,900

=$10,200-$2,900

=$7,300

Allowance for doubtful accounts with a credit balance of $7,300

Hence Option B correct

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