The Tanner Company has provided the following information after year-end adjustments: • Allowance for doubtful accounts increased $19,000.
• Accounts receivable increased $390,000 during the year.
• Accounts written off as uncollectible totaled $20,000.
• Sales totaled $2,500,000.
• Sales discounts were $100,000.
What was the amount of Tanner's net sales?

A) $1,990,000.
B) $2,380,000.
C) $2,400,000.
D) $2,420,000.

Question

Aidan Rospert · Accepted Answer

Final Answer : C, Explanation :  Net sales is calculated by subtracting sales discounts and allowances from total sales.Total sales = $2,500,000Sales discounts = $100,000Allowance for doubtful accounts increased by $19,000, which means $19,000 worth of sales were expected to be uncollectible.Accounts written off were $20,000, which means $20,000 worth of sales were actually uncollectible.Therefore, the allowance for doubtful accounts balance after adjustments is $19,000 - $20,000 = -$1,000 (credit balance).Since the allowance account has a credit balance, it needs to be added to net sales.Net sales = $2,500,000 - $100,000 + $1,000 = $2,400,000.

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