Compute the balance in the Allowance for Doubtful Accounts
Course:- Accounting Basics
Reference No.:- EM132284004

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Question - On January 15, 2008, the Accounts Receivable account of Picasso Company had a balance of $56,000 and the Allowance for Doubtful Accounts had a balance of $700 credit. On January 25, 2008, one of Picasso's customer's account in the amount of $2,000 was deemed to be uncollectible and hence written off. There were no other transactions affecting Accounts Receivable for the month of January. If Picasso estimates uncollectible Accounts for the month of January, to be 10% of the Accounts Receivable at the end of the month, the balance in the Allowance for Doubtful Accounts immediately after the year end adjusting entry for uncollectible accounts is posted would be:

a. $5,600

b. $6,700

c. $6,900

d. $5,400

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