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At December 31, Gill Co. reported accounts receivable of $238,000 and an allowance for uncollectible accounts of $600 (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:
(A) $6,540
(B) $7,800
(C) $7,140
(D) $7,740.

Respuesta :

Answer:

The amount of adjustment that will be made for uncollectible accounts is A) $6540 .

Explanation:

GIVEN INFORMATION -

Accounts Receivables = $238,000

Allowance of uncollectible account = $600 ( credit )

The percentage for allowance for unaccountable account should be 3% of account receivable, so the amount would be -

3% x Account receivable

= 3% x $238,000

= $7140

Amount of adjustment = $7140 - $600

                                      = $6540

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