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At December 31, Gill Co. reported accounts receivable of $264,000 and an allowance for uncollectible accounts...

At December 31, Gill Co. reported accounts receivable of $264,000 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 3% of accounts receivable. The amount of the adjustment for uncollectible accounts would be:

Multiple Choice

  • $6,470.

  • $1,450.

  • $7,920.

  • $5,780.

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Answer #1

Adjustment for uncollectibles

= (Accounts receivable * % uncollectible) - credit balance

= (264,000*3%) - 1450

= 6470

OPTION A IS THE ANSWER

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