Ending receivables are $384,000 and estimated uncollectibles are 2.25% of that balance. What required ending allowance balance results, before calculating an adjusting entry?
Correct Answer
A) $8,640
The target ending allowance is $384,000 × 0.0225 = $8,640. An adjusting entry would also require the existing allowance balance; it is not supplied. Source: https://openstax.org/books/principles-financial-accounting/pages/9-2-account-for-uncollectible-accounts-using-the-balance-sheet-and-income-statement-approaches
Why This Is the Correct Answer
The target ending allowance is $384,000 × 0.0225 = $8,640. An adjusting entry would also require the existing allowance balance; it is not supplied. Source: https://openstax.org/books/principles-financial-accounting/pages/9-2-account-for-uncollectible-accounts-using-the-balance-sheet-and-income-statement-approaches
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