The following information is from the 2025 records of Fast Lane Racing Gear: Accounts receivable, December 31, 2025 $42,000 (debit) Allowance for Bad Debts, December 31, 2025 prior to adjustment 1,500 (debit) Net credit sales for 2025 176,000 Accounts written off as uncollectible during 2025 20,000 Cash sales during 2025 27,000 Bad debts expense is estimated by the aging−of−receivables method. Management estimates that $9,000 of accounts receivable will be uncollectible. Calculate the ending balance of Allowance for Bad Debts, after the adjustment for bad debts expense, at December 31, 2025. A. $7,000 B. $5,280 C. $9,000 D. $12,000
The following information is from the 2025 records of Fast Lane Racing Gear: Accounts receivable, December 31, 2025 $42,000 (debit) Allowance for Bad Debts, December 31, 2025 prior to adjustment 1,500 (debit) Net credit sales for 2025 176,000 Accounts written off as uncollectible during 2025 20,000 Cash sales during 2025 27,000 Bad debts expense is estimated by the aging−of−receivables method. Management estimates that $9,000 of accounts receivable will be uncollectible. Calculate the ending balance of Allowance for Bad Debts, after the adjustment for bad debts expense, at December 31, 2025. A. $7,000 B. $5,280 C. $9,000 D. $12,000
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter6: Cash And Receivables
Section: Chapter Questions
Problem 7RE: McKinney Co. estimates its uncollectible accounts as a percentage of credit sales. McKinney made...
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Question
The following information is from the 2025 records of Fast Lane Racing Gear:
Accounts receivable, December 31, 2025
|
$42,000
(debit) |
Allowance for
prior to adjustment
|
1,500
(debit) |
Net credit sales for 2025
|
176,000
|
Accounts written off as uncollectible during 2025
|
20,000
|
Cash sales during 2025
|
27,000
|
Bad debts expense is estimated by the
accounts receivable will be uncollectible. Calculate the ending balance of Allowance for Bad Debts, after the adjustment for bad debts expense, at December 31, 2025.
aging−of−receivables
method. Management estimates that
$9,000
of $7,000
$5,280
$9,000
$12,000
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