In 2013, Chandler Company had net credit sales of $1,125,000. On January 1, 2013

Question

In 2013, Chandler Company had net credit sales of $1,125,000. On January 1, 2013, Allowance for Doubtful Accounts had a credit balance of $27,000. During 2013, $42,000 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 $330,000, what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2013? $18,000 $33,000 $48,000 $97,500

Explanation / Answer

Allowance for doubtful account balance should be = 330000*10% = 33000

Unadjusted balance of allowance for doubtful account = 27000-42000 = 15000 Debit balance

So adjusted amount = 33000+15000 = 48000

So answer is c) $48000

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