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Credit sales $10,000,000
Accounts receivable3,000,000
Allowance for uncollectible accounts50,000
XYZ uses3% of accounts receivable to determine its allowance for uncollectible accounts at year end. By what amount should XYZ adjust its allowance for uncollectible accounts at year end?
A. $0
B. $40,000
C. $90,000
D. $140,000
Required amount is $90000. Existing allowance is $50000 so there should be an adjustment of additional $40000
Answer D
the allowance for bad debts should be increased to90,000. adjustment required :40000 credit
The answer is B $40000 because, total uncollectible allowance is $90,000 but alreadly allowed $ 50,000 so we are left with $40,000 to adjust
Well master answer to your question is (d)
Accounts Receivable X3%
Less
The present balance of allowance collectible accounts
= $90,000 - $50,000
= $40,000
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