In 2020, Ahmad Company had credit .1 sales of $800,000 and granted sales discounts of $20,000. On January 1, 2011, Allowance for Doubtful Accounts had a credit balance of $22,500. During 2011, $31,500 of uncollectible accounts receivable were written off. Past experience indicates that 3% of net credit sales become uncollectible. What should be the adjusted balance of Allowance for ?Doubtful Accounts at December 31, 2020
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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.
![In 2020, Ahmad Company had credit.1
sales of $800,000 and granted sales
discounts of $20,000. On January 1, 2011,
Allowance for Doubtful Accounts had a
credit balance of $22,500. During 2011,
$31,500 of uncollectible accounts
receivable were written off. Past
experience indicates that 3% of net credit
sales become uncollectible. What should
be the adjusted balance of Allowance for
?Doubtful Accounts at December 31, 2020](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F692ab19f-295a-4076-a39d-40edf2203d86%2F87a346a3-5db6-453e-a8f8-c987b8933b59%2Fgfalfs_processed.jpeg&w=3840&q=75)
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