At the End of the Current Year, the Trial Balance

question 89

Short Answer

At the end of the current year, the trial balance of Carlton's Auto Sales included the accounts and balances shown below. Credit sales were $9,200,000. Returns and allowances on these sales were $55,000. Assume that the firm bases its estimate of the loss from uncollectible accounts on 0.3 percent of net credit sales.
Accounts Receivable $ 1,300,000 Dr.
Allowance for Doubtful Accounts 9,000 Cr.
Sales 14,000,000 Cr.
Sales Returns and Allowances 110,000 Dr.
1. What is the estimated loss from uncollectible accounts for the current year?
2. What is the balance in the Allowance for Doubtful Accounts after adjustment?

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Definitions:

Logarithm

The inverse operation to exponentiation, indicating the power to which a base number must be raised to produce a given number.

Logarithm

The exponent to which a base must be raised to produce a given number, expressing the relationship between a geometric progression and an arithmetic progression.

Calculator

An electronic device or software used for performing mathematical operations.

Inverse Function

A function that reverses the effect of the original function, such that applying both the function and its inverse will return the original input.