The following information pertains to Oro Corp.: Credit sales for the year ended December 31 $450,000 Credit balance in allowance for uncollectible accounts at January 1 10,800 Bad debts written off during the year 18,000 According to past experience, 3% of Oro's credit sales have been uncollectible. After provision is made for bad debt expense for the year ended December 31, the allowance for uncollectible accounts balance would beA. $6,300

B. $13,500

C. $24,300

D. $31,500

Question

Business

Larry

23 May, 05:47

The following information pertains to Oro Corp.: Credit sales for the year ended December 31 $450,000 Credit balance in allowance for uncollectible accounts at January 1 10,800 Bad debts written off during the year 18,000 According to past experience, 3% of Oro's credit sales have been uncollectible. After provision is made for bad debt expense for the year ended December 31, the allowance for uncollectible accounts balance would beA. $6,300

B. $13,500

C. $24,300

D. $31,500

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Answers (1)

Know the Answer?

Leandro Mcdonald · Answer 1

A. $6,300

Explanation:

The computation of the ending balance of uncollectible account is shown below:

= Opening balance of the uncollectible accounts + uncollected amount - bad debt written off

where,

uncollected amount = Credit sales * given percentage

= $450,000 * 3%

= $13,500

The other item values would remain the same

Now put these values to the above formula

So, the value would equal to

= $10,800 + $13,500 - $18,000

= $6,300