beverly8075
31.03.2020 •
Business
In 2017 Wilkinson Company had net credit sales of $2250000. On January 1, 2017, Allowance for Doubtful Accounts had a credit balance of $36000. During 2017, $90000 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 $600000, what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2017
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Ответ:
$114,000
Explanation:
Given that,
Net credit sales = $2,250,000
Opening allowance for Doubtful Accounts = $36,000
Uncollectible accounts receivable written off = $90,000
Firstly, we need to find the excess amount to be adjusted to allowance for Doubtful Accounts. It is calculated as follows:
= Uncollectible accounts receivable written off - Opening allowance for Doubtful Accounts
= $90,000 - $36,000
= $54,000
Allowance amount:
= 10% of the balance in receivables
= 0.1 × $600,000
= $60,000
Therefore, the required adjustment to the Allowance for Doubtful Accounts at December 31, 2017 is determined by summing up the excess amount and allowance amount.
= Excess amount to be adjusted to allowance for Doubtful Accounts + Allowance amount
= $54,000 + $60,000
= $114,000
Ответ:
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