During the current year, the Dugan Co. had net credit sales of $750,000. On January 1, of the current year, Allowance for Doubtful Accounts had a credit balance of $16,000. Throughout the year, $30,000 of uncollectible accounts receivable were written off. Past experience indicates that the allowance should be 10% of the balance in receivables (percentage of receivable basis). If the accounts receivable balance at December 31 was $200,000, what is the required adjustment to the Allowance for Doubtful Accounts at December 31? Question 5 options: A) $20,000 B) $34,000 C) $36,000 D) $30,000
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
During the current year, the Dugan Co. had net credit sales of $750,000. On January 1, of the current year, Allowance for Doubtful Accounts had a credit balance of $16,000. Throughout the year, $30,000 of uncollectible
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