Allowance for Doubtful Accounts Has a Debit Balance of $500

question 47

Multiple Choice

Allowance for Doubtful Accounts has a debit balance of $500 at the end of the year,before adjustments.Sales for the year amounted to $870,000,sales discounts amounted to $30,000 and sales returns and allowances amounted to $40,000.If the uncollectible accounts expense is estimated at 2% of net sales,the balance in the Allowance for Doubtful Accounts after the entry to record estimated losses from uncollectible accounts will be

• A) $17,400
• B) $16,500
• C) $16,000
• D) $15,500

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Definitions:

Not Estimable

A term indicating that something cannot have its value, size, or amount accurately determined or calculated.

Contingent Liability

A potential financial obligation that may arise in the future, depending on the occurrence or non-occurrence of one or more uncertain events.

Probable

A term often used in accounting and finance to describe an event or action that is likely to occur based on current evidence.

Not Estimable

describes a condition where the value or quantity of something cannot be accurately predicted or determined.