Determine the amount to be added to Allowance for Doubtful Accounts in each of t

ID: 2489033 • Letter: D

Question

Determine the amount to be added to Allowance for Doubtful Accounts in each of the following cases:

(a)

Balance of $3,000 in the allowance account just prior to adjustment. Analysis of accounts receivable indicates doubtful accounts of $25,000.

__________

(b)

Balance of $500 in the allowance account just prior to adjustment. Uncollectibles are estimated at 2% of sales, which totaled $800,000 for the year.

__________

(a)

Balance of $3,000 in the allowance account just prior to adjustment. Analysis of accounts receivable indicates doubtful accounts of $25,000.

__________

(b)

Balance of $500 in the allowance account just prior to adjustment. Uncollectibles are estimated at 2% of sales, which totaled $800,000 for the year.

__________

a) Balance proir to adjustment $3,000

Total balance of allowance account = $25,000

Amount added to allowance account = 25,000 - 3,000 = $22,000

Balance of allowance added = 2% *800,000 = $16,000

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