Accounts Receivable 10,000 (3) Net credit sales for the month are $900,000. The

Question

Accounts Receivable 10,000 (3) Net credit sales for the month are $900,000. The accounts receivable balance is $192,000. The allowance is calculated as 5% of the receivables balance using the percentage-of-receivables basis. If the Allowance for Doubtful Accounts has a credit balance of $6,000 before adjustment, what is the balance after adjustment? a. $ 9,600 b. 3,600 c. $15,600 d. $ 9,900 (4) In 2017 the Golic Co. had net eredit sales of $900,000. On January 1, 2017, the Allowance for Doubtful Accounts had a credit balance of $22,500. During 2017, S36,000 of uncollectible accounts receivable were written off. Past experience indicates that the allowance should be 10% of the balance in receivables (percentage-of-receivables basis). If the accounts receivable balance at December 31 was $240,000, what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2017? 8-4 apter 08 - Reporting and Analyzing Receivables

Explanation / Answer

3) Balance after adjustment = 192000*5% = 9600

so answer is a) $9600

4) Calculate required adjustment :

Adjusted amount should be = 240000*10% = 24000

Unadjusted amount of allowance for doubtful accounts = 22500-36000 = 13500

So adjustment amount = 24000+13500 = 37500

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