Assume that Simple Co. had credit sales of $256,000 and cost of goods sold of $1

Question

Assume that Simple Co. had credit sales of $256,000 and cost of goods sold of $156,000 for the period. Simple uses the aging method and estimates that the appropriate ending balance in the Allowance for Doubtful Accounts is $3,600. Before the end-of-period adjustment is made, the Allowance for Doubtful Accounts has a credit balance of $310.

Assume that Simple Co. had credit sales of $256,000 and cost of goods sold of $156,000 for the period. Simple uses the aging method and estimates that the appropriate ending balance in the Allowance for Doubtful Accounts is $3,600. Before the end-of-period adjustment is made, the Allowance for Doubtful Accounts has a credit balance of $310.

Explanation / Answer

Simple Co Details Amt $ Required Cr Balance in Allowance for Doubtful Accounts               3,600 Existing Credit balance in Allowance for Doubtful Accounts                  310 Additional credit balance required in Allowance for Doubtful Accounts               3,290 Bad Debt expense to be recorded as end of the period adjustment $          3,290

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