The General Ledger Account for Accounts Receivable Shows a Debit

question 91

Multiple Choice

The general ledger account for Accounts Receivable shows a debit balance of $25,000. Allowance for Uncollectible Accounts has a credit balance of $1,500. Net sales for the year were $250,000. In the past, 3 percent of sales have proved uncollectible, and an aging of accounts receivable resulted in an estimate of $10,000 of uncollectible accounts receivable. Using the accounts receivable aging method, the Allowance for Uncollectible Accounts balance (after adjustment) would be

• A) $11,500.
• B) $10,000.
• C) $8,500.
• D) $10,750.

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Definitions:

Annual Payments

Regular amounts paid once a year, often used in the context of loan repayments or investment returns.

Interest Rate

The amount charged by a lender to a borrower for the use of assets, expressed as a percentage of the principal.

Lease Payments

Regular payments made by a lessee to a lessor for the use of an asset.

Cost of Funds

The interest rate that financial institutions pay for the use of money or funds they lend out to borrowers.