At the End of the Current Year, the Trial Balance

question 80

Short Answer

At the end of the current year, the trial balance of Aaron's Kitchen Supply Corporation included the accounts and balances shown below. Credit sales were $4,600,000. Returns and allowances on these sales were $27,500. Assume that the firm bases its estimate of the loss from uncollectible accounts on 4 percent of accounts receivable. $$\begin{array} { l r } \text { Accounts Receivable } & \$ 650,000 \mathrm { Dr } . \\\text { Allowance for Doubtful Accounts } & 4,500 \mathrm { Cr } . \\\text { Sales } & 7,000,000 \mathrm { Cr } . \\\text { Sales Returns and Allowances } & 55,000 \mathrm { Dr } .\end{array}$$ 1. What is the balance in the Allowance for Doubtful Accounts account after the adjusting entry for the estimated loss from uncollectible accounts is posted?
2. What is the amount of the adjusting entry for the estimated loss from uncollectible accounts?

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Definitions:

CPP Contributions

Payments made into the Canada Pension Plan by workers and employers to fund future retirement, disability, or survivor benefits.

EI Premiums

Contributions made by employees and employers to the Employment Insurance (EI) program, which provides temporary financial assistance for unemployed workers.

General Credit

Refers to the overall creditworthiness or credit status of an individual or business, taking into account their ability to repay debts and financial obligations.