Determine the following for each case: 1. The amount to be added to Allowance fo

Question

Determine the following for each case:

1. The amount to be added to Allowance for Doubtful Accounts.

2. The ending balance of the Allowance for Doubtful Accounts.

Case

(alpha) Credit balance of $500 in the allowance account just prior to adjustment. Using the Analysis of A/R Method indicates doubtful accounts of $8,500.

(beta) Credit balance of $300 in the allowance account just prior to adjustment. Uncollectible accounts are estimated at 2% of sales, using the % of Sales Method, which totaled $1,000,000 for the year.

ANSWERS:

Case

Alpha. 1.

2.

Beta. 1.

2.

Explanation / Answer

Alpha 1. Credit balance of $500 is already in allowance however the total amount of allowance for doubtful accounts should be 8500 So the amount to be added to allowance $8000. Alpha 2. The ending balance of the allowance for doubtful accounts is $8500 Beta 1. Ucollectible accounts = 2% of 1000000 =20000 Credit balance of $300 is already in allowance however the total amount of allowance for doubtful accounts should be 20000+300(i.e.20300) So the amount to be added to allowance $20000. Beta 2. The ending balance of the allowance for doubtful accounts is $20300

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.