A Company Has Net Sales of $50,000 During the Year

question 130

Multiple Choice

A company has net sales of $50,000 during the year.At year end (before an adjustment is made) ,Allowance for Uncollectible Accounts has a credit balance of $2,500.If the company estimates that 3 percent of net sales are uncollectible and the company uses percentage of net sales method,what is the balance in the allowance account after the year-end adjustment has been made?

• A) $1,500 debit balance
• B) $1,500 credit balance
• C) $4,000 credit balance
• D) $1,000 debit balance