Question

At December 31, Gill Co. reported accounts receivable of $246,000 and an allowance for uncollectible accounts of $1,800 (debit) before any adjustments. An analysis of accounts receivable suggests that the allowance for uncollectible accounts should be 3% of accounts receivable. The amount of the adjustment for uncollectible accounts would be:

At December 31, Gill Co. reported accounts receivable of $232,000 and an allowance for uncollectible accounts of $1,100 (credit) before any adjustments. An analysis of accounts receivable suggests that the allowance for uncollectible accounts should be 2% of accounts receivable. The amount of the adjustment for uncollectible accounts would be:

Answer 1

Answers

• At December 31, Gill Co. reported accounts receivable of $246,000 and an allowance for uncollectible accounts of $1,800 (debit) before any adjustments. An analysis of accounts receivable suggests that the allowance for uncollectible accounts should be 3% of accounts receivable. The amount of the adjustment for uncollectible accounts would be:
  Calculation--
  >Adjusted balance required in Allowance account = $ 246000 x 3% = $ 7380 Credit
  >Unadjusted balance in Allowance account = $ 1800 Debit
  >Amount of adjustment = $ 7380 Credit + 1800 debit = $ 9,180 Answer
• At December 31, Gill Co. reported accounts receivable of $232,000 and an allowance for uncollectible accounts of $1,100 (credit) before any adjustments. An analysis of accounts receivable suggests that the allowance for uncollectible accounts should be 2% of accounts receivable. The amount of the adjustment for uncollectible accounts would be:
  Calculation--
  >Adjusted balance required in Allowance account = $ 232000 x 2% = $ 4640 Credit
  >Unadjusted balance in Allowance account = $ 1100 Credit
  >Amount of adjustment = $ 4640 Credit – 1100 Credit = $ 3,540 Answer