At the start of the current year, Javier Company had a credit balance in the All

Question

At the start of the current year, Javier Company had a credit balance in the Allowance for Doubtful Accounts of $6,000. During the year an adjustment of 2% of sales was made for estimated uncollectible accounts. Sales for the year were $2,000,000 and $30,000 of accounts receivable were written off as worthless. Recoveries of accounts previously written off of $1,000 were made during the year. The year end financial statements should show:

A) Bad Debts exsepnse of $34,000
B) Bad Debts exspense of $46,000
C) Allowance for Doubtful Accounts with a credit balance of $17,000
D) Allowance for Doubtful Accounts with a credit balance of $10,000
E) None of the above

Explanation / Answer

Ans E

None of the Above

Workings

Allowance for Doubtful Accounts Amount Opening Balance      6,000.00 Add: Provision created during the year    40,000.00 Less: Written off During the Year -30,000.00 Closing Balance    16,000.00 Bad Debts expenses Amount Provision Creaed During the year    40,000.00

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