a.  The allowance account before adjustment has a negative balance of $(18,500). Bad debt expense is estimated at ½ of 1% of sales.  The allowance account before adjustment has a negative balance of $(18,500). An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $200,000. $fill in the blank 2 c.  The allowance account before adjustment has a positive balance of $9,000. Bad debt expense is estimated at ¾ of 1% of sales. $fill in the blank 3 d.  The allowance account before adjustment has a positive balance of $9,000. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $255,000.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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At the end of the current year, the accounts receivable account has a balance of $2,875,000 and sales for the year total $34,500,000.

Determine the amount of the adjustment to provide for doubtful accounts under each of the following independent assumptions:

a.  The allowance account before adjustment has a negative balance of $(18,500). Bad debt expense is estimated at ½ of 1% of sales.

 The allowance account before adjustment has a negative balance of $(18,500). An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $200,000.
$fill in the blank 2

c.  The allowance account before adjustment has a positive balance of $9,000. Bad debt expense is estimated at ¾ of 1% of sales.
$fill in the blank 3

d.  The allowance account before adjustment has a positive balance of $9,000. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $255,000.

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