Answered

n 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?



$96000

$54000

$60000

$25000

Answer :

phamdiep1810

Answer:

$60,000

Explanation:

In 2017, uncollectible accounts receivable were written of $90,000, the mount more than Allowance for Doubtful Accounts balance on 1 January 2017. The company must make the entry:

Debit Allowance for Doubtful Accounts: $36,000

Debit Bad debt expense: $54,000

Credit Uncollectible accounts receivable: $90,000

So, before adjunsting, Allowance for Doubtful Accounts had balance of $0 on 31 December 2017.

The allowance should be: 10%x $600,000 = $60,000

and the required adjustment to the Allowance for Doubtful Accounts at December 31, 2017: $60,000-$0=$60,000

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