Estimating Uncollectible Accounts Expense
On December 31, prior to recording year-end adjusting entries, Accounts Receivable has a debit balance of $80,000, and the Allowance for Uncollectible Accounts has a credit balance of $3,500. Credit sales for the year total $600,000. If credit losses are estimated at 1/2 percent of credit sales, which of the following statements is true?
AThe Uncollectible Accounts Expense for the year will be $6,500.
BThe balance of the Allowance for Uncollectible Accounts will be $6,500 after adjustment.
CThe balance of the Allowance for Uncollectible Accounts will be $3,500 after adjustment.
DThe Uncollectible Accounts Expense for the year will be $500.