The following information pertains to Lightning Inc., at the end of the year: Credit Sales $75,000
Accounts Payable 13,900
Accounts Receivable 8,200
Allowance for Uncollectible Accounts $900 credit
Cash Sales 24,000
Lightning uses the percentage-of-credit-sales method and estimates 4% of sales are uncollectible. What is the ending balance of the allowance account after the year-end adjustment?
$3,900
$4,860
$3,000
$2,100

$3900

Explanation:

Calculation to determine the ending balance of the allowance account after the year-end adjustment

Balance in allowance for uncollectible account$ 900

Add Bad debts during the period $3,000

($75,000*4%)

Ending Balance in allowance for uncollectible account$ 3,900

($900+$3,000)

Therefore the ending balance of the allowance account after the year-end adjustment is $3900

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