Question

Wellington Corp. has outstanding accounts receivable totaling $3 million as of December 31 and sales on credit during the year of $15 million. There is also a debit balance of $12,000 in the allowance for doubtful accounts. If the company estimates that 8% of its outstanding receivables will be uncollectible, what will be the balance in the allowance for doubtful accounts after the year-end adjustment to record bad debt expense? $1, 200,000. $ 228,000. $ 240,000. $ 252,000.

Answer 1

Answer:

Balance in Allowance for Doubtful accounts = $228,000

Explanation:

Outstanding Accounts Receivable                $3,000,000

(x) Percentage uncollectible                                        8%        

(=) Allowance for Doubtful accounts                  $240,000

(-) Debit balance                                                          $12,000

(=) Balance in Allowance for Doubtful accounts    $228,000

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