Question

Linus Company uses the percent-of-sales method to estimate uncollectibles. Net credit sales for the current year amount to $100,000, and management estimates 4% will be uncollectible. The amount of expense to report on the income statement was $4,000. The Allowance for Uncollectible Accounts prior to adjustment has a credit balance of $1,000. The balance of Allowance for Uncollectible Accounts, after adjustment, will be A. $5,000. B. $500. C. $4,500. D. $4,000.

          Linus Company uses the percent-of-sales method to estimate uncollectibles. Net credit sales for the current year amount to $100,000, and management estimates 4% will be
uncollectible. The amount of expense to report on the income statement was $4,000. The Allowance for Uncollectible Accounts prior to adjustment has a credit balance of $1,000.
The balance of Allowance for Uncollectible Accounts, after adjustment, will be
A. $5,000.
B. $500.
C. $4,500.
D. $4,000.

Linus Company uses the percent-of-sales method to estimate uncollectibles. Net credit sales for the current year amount to 100,000, and management estimates 4% will be
uncollectible. The amount of expense to report on the income statement was4,000. The Allowance for Uncollectible Accounts prior to adjustment has a credit balance of 1,000.
The balance of Allowance for Uncollectible Accounts, after adjustment, will be
A.5,000.
B. 500.
C.4,500.
D. 4,000.

Added by Natalie C.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

Instant Answer

Solved by Expert Brooke Bussoletti

07/24/2023

Step 1

Step 1: Calculate the estimated uncollectible amount: $100,000 * 4% = $4,000 Show more…

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Linus Company uses the percent-of-sales method to estimate uncollectibles. Net credit sales for the current year amount to $100,000, and management estimates 4% will be uncollectible. The amount of expense to report on the income statement was $4,000. The Allowance for Uncollectible Accounts prior to adjustment has a credit balance of $1,000. The balance of Allowance for Uncollectible Accounts, after adjustment, will be A. $5,000. B. $500. C. $4,500. D. $4,000.