At the End of the Current Year, the Trial Balance

question 40

Short Answer

At the end of the current year, the trial balance of Tracey's Consulting Services included the accounts and balances shown below. Credit sales were $90,000. Returns and allowances on these sales were
$1,000. Assume that the firm bases its estimate of the loss from uncollectible accounts on 0.4 percent of net credit sales.

1. What is the estimated loss from uncollectible accounts for the current year?
2. What is the amount of the adjusting entry for the estimated loss from uncollectible accounts?

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Definitions:

Comparative Analysis

The process of comparing two or more items, such as data sets, statistical results, or models, to identify their similarities and differences.

Simple Exponential Smoothing Model

A forecasting technique that applies smoothing constants to previous observations, typically used for time series data without trend or seasonality.

Trend

A general direction in which something is developing or changing, often identified in data analysis or market movements.

Seasonality

The occurrence of variations that repeat at specific regular intervals less than a year, often influenced by the calendar or weather.