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29 August, 18:19

In 2022 the Bramble Corp. had net credit sales of $920000. On January 1, 2022, the Allowance for Doubtful Accounts had a credit balance of $22100. During 2022, $33200 of uncollectible accounts receivable were written off. Past experience indicates that the allowance should be 5% of the balance in receivables (percentage-of-receivables basis). If the accounts receivable balance at December 31 was $232000, what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2022

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  1. 29 August, 20:05
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    The required adjustment to the allowance for doubtful account is $22,700

    Explanation:

    Provision for doubtful debt is an amount usually set aside by the management of an organization against the likely hood of debtors not paying their debt. It is a reduction in accounts receivable in the balance sheet.

    Solution;

    Adjustment is therefore=

    $33,200 - $22,100 + ($232,000 * 5%)

    $33,200 - $22,100 + $11,600

    $22,700

    It is to be noted that last year estimate would be discounted, while write off during the year is added to the period end estimate.
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