Question

At December 31, Gill Co. reported accounts receivable of $243,000 and an allowance for uncollectible accounts of $1,100 (debit) before any adjustments. An analysis of accounts receivable suggests that the allowance for uncollectible accounts should be 4% of accounts receivable. The amount of the adjustment for uncollectible accounts would be: _________

a. $8,620.
b. $9,720.
c. $10,820.
d. $1,100.

Answer 1

c. $10,820.

Step-by-step explanation:

The computation of the amount of the adjustment for uncollectible accounts is shown below

= Account receivable reported × given percentage + debit balance of allowance for uncollectible accounts

= $243,000 × 4% + $1,100

= $9,720 + $1,100

= $10,820

hence, the amount of the adjustment for uncollectible accounts is $10,820

Therefore the correct option is c