Question

At the beginning of the year, the balance in the Allowance for Doubtful Accounts is a credit of $786. During the year, $387 of previously written off accounts were reinstated and accounts totaling $649 are written off as uncollectible. The end of the year balance in the Allowance for Doubtful Accounts should be the one listed below.

Select the correct answer.

$387

$524

$786

$649

Answer 1

Answer - $524

Explanation -

Opening balance of Allowance for Doubtful Accounts $786 cr and during the year $387 of previously written off accounts were reinstated, which means total balance in the Allowance for Doubtful Accounts stand now at $1173 ($786 + $387)

Now accounts totaling $649 are written off as uncollectible which means it will reduce the balance of Allowance for Doubtful Accounts as it is uncollectible so Ending balance in the allowance for Doubtful Accounts will be

= $1173 - $649 = $524

Ending balance in the allowance for Doubtful Accounts = $524