**Problem 11: Allowance for Uncollectible Accounts Adjustment**At December 31, Gill Co. reported accounts receivable of $238,000 and an allowance for uncollectible accounts of $600 (credit) 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:- A. $6,540- B. $7,800- C. $7,140- D. $7,740**Solution Explanation:**To determine the correct adjustment for uncollectible accounts, we need to follow these steps:1. **Calculate 3% of Accounts Receivable:** - Accounts Receivable: $238,000 - 3% of $238,000 = $7,1402. **Determine Adjustment Needed:** - Desired Allowance for Uncollectible Accounts = $7,140 - Existing Allowance = $600 - Adjustment Required = $7,140 - $600 = $6,540Therefore, the correct answer is **A. $6,540**.

Allowance for uncollectible accounts is considered a contra-asset account. It is prepared against the value of accounts receivable. The adjustment for an uncollectible account can be based on accounts receivable and credit sales.The amount of adjustment for uncollectible accounts = ( Accounts receivable * Percentage of uncollectible ) - Credit balance in the allowance for doubtful accounts = ( 238,000 * 3%) - $ 600 = $ 7,140 - $ 600 = $ 6,540 The correct answer is A. $ 6,540

Business

Accounting

11. At December 31, Gill Co. reported accounts receivable of $238,000 and an allowance for uncollectible accounts of $600 (credit) 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: A. B. C. D. $6,540. $7,800. $7,140. $7,740.

11. At December 31, Gill Co. reported accounts receivable of $238,000 and an allowance for uncollectible accounts of $600 (credit) 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: A. B. C. D. $6,540. $7,800. $7,140. $7,740.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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At December 31, Gill Co. reported accounts receivable of $294,000 and an allowance for uncollectible accounts of $1,050 (credit) before any adjustments. An analysis of accounts receivable suggests that the allowance for uncollectible accounts should be 4% of accounts receivable. The amount of the adjustment for uncollectible accounts would be: Multiple Choice $11,760. $10,710. $9,220. $1,050.
At the end of the current year, Accounts Receivable has a balance of $800,000; Allowance for Doubtful Accounts has a credit balance of $7,500; and net sales for the year total $3,500,000. Bad debt expense is estimated at 1⁄2of 1% of net sales. Determine:The amount of the adjusting entry for uncollectible accounts;The adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense;The net realizable value of accounts receivable.
Oo.151. Subject :- Account
11. Please answer which is best for
At December 31, Gill Co. reported accounts receivable of $236,000 and an allowance for uncollectible accounts of $1,450 (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: Multiple Choice $1,450 $4.980 $3,270. $4,720
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