**Problem 8: Adjusting Entry for Uncollectibles**Alladin Corporation uses the allowance method to estimate uncollectible accounts. At the end of the year, the corporation estimates that 2% of its credit sales of $1,000,000 will be uncollectible. The Allowance for Doubtful Accounts currently has a credit balance of $1,000 before any adjustments. What is the amount of the adjusting entry required?**Options:**a. $20,000b. $21,000c. $22,000d. $19,000**Solution Explanation:**To find the adjusting entry amount, first calculate the estimated uncollectibles:- 2% of $1,000,000 = $20,000 (total estimated uncollectibles)Since there is already a credit balance of $1,000 in the Allowance for Doubtful Accounts, the adjusting entry needed is:- $20,000 (total estimated uncollectibles) - $1,000 (existing credit balance) = $19,000Therefore, the correct amount for the adjusting entry is option d: **$19,000**.

8. Alladin Corporation uses the allowance method in estimating uncollectibles. At the end of the year, Alladin Corporation estimates that 2% of its credit sales of $1,000,000 will be uncollectible. Allowance for Doubtful Accounts has a credit balance of $1,000 before adjustment. What is the amount of the adjusting entry? a. $20,000 b. $21,000 c. $22,000 d. $19,000

8. Alladin Corporation uses the allowance method in estimating uncollectibles. At the end of the year, Alladin Corporation estimates that 2% of its credit sales of $1,000,000 will be uncollectible. Allowance for Doubtful Accounts has a credit balance of $1,000 before adjustment. What is the amount of the adjusting entry? a. $20,000 b. $21,000 c. $22,000 d. $19,000

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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