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25 April, 14:21

Before year-end adjusting entries, Dunn Company's account balances at December 31, 2020, for accounts receivable and the related allowance for doubtful accounts were $1,500,000 and $90,000, respectively. An aging of accounts receivable indicated that $125,000 of the December 31 receivables are expected to be uncollectible. The accounts receivable amount expected to be collected after adjustment for bad debt expense is

A. $1,465,000

B. $1,375,000

C. $1,285,000

D. $1,410,000

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Answers (1)
  1. 25 April, 16:39
    0
    Option (B) is correct.

    Explanation:

    Given that,

    Accounts receivables = $1,500,000

    Allowance for doubtful accounts = $90,000

    Expected uncollectibles = $125,000

    The collection of accounts receivables after the adjustment for bad debt expense is determined by deducting the expected uncollectibles from the total amount of accounts receivables.

    Accounts receivable amount expected to be collected after adjustment for bad debt expense:

    = Accounts receivables - Expected uncollectibles

    = $1,500,000 - $125,000

    = $1,375,000
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