$425,000 ) 3400,000 6 The Allowance for Doubtful Accounts is adjusted: Fat the e

Question

$425,000 ) 3400,000 6 The Allowance for Doubtful Accounts is adjusted: Fat the end of each accounting period. b) each time a customer's debt is satisfied. c) within one year of granting credit to a customer. d) each time a customer is granted credit C. Gross accounts receivable is $10,000. Allowance for Doubtful Accounts has a credit balance of$200. Net sales for the year are $150,000. In the past, 1% of sales had prove uncollectible, and an aging of the receivables indicates $1,200 as uncollectible. What would be the adjusted balance of the Allowance account under the balance sheet approach? a) $1,700 b) $1,200 c) $1,000 d) $900 4. At December 31, 200x, Brooke's Horse Stable unadjusted Allowance for Doubtful Accounts showed a debit balance of $432. An aging of the accounts receivable indicates probable uncollectible accounts of $1,000. The year-end adjusting entry for bad debts expense: a) includes a debit to the Allowance account for $568. b) includes a credit to the Allowance account for $42. c) includes a debit to the Allowance account for $822. d) includes a credit to the Allowance account for $1,432.

Explanation / Answer

b) The allowance for doubtful accounts are adjusted

So answer is a) at the end of each accounting period

c) Balance sheet approach includes againg balance method. So adjusted balance for allowance account under balance sheet is $1200

So answer is b) $1200

d) Year end adjusting entry :

So answer is d) includes a credit to the allowance account for $1432

Date account and explanation debit credit Bad debt expense (1000+432) 1432 Allowance for doubtful accounts 1432

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