A Corporation has a December 31^st year end and uses the allowance method in accounting for its receivables. You are provided with the following information:

1. An unadjusted trial balance at December 31^st showed the following:

account	debit	credit
account receivable	500,000
allowance for doubtful account	10,000
sales revenue *all cred*		5,300,000
bad debt	20,000

2. Accounts receivable written off amounts to 40,000.

3. no cash reciepts

4. The year-end aged accounts receivable subledger along with management’s estimates of the probability of non-collection within each aging category is:

days outstanding		% not collectable
1-20	250,000	3%
21-40	150,000	5%
41-60	76,000	10%
61-80	34,000	25%
81-100	20,000	50%
total	540,000

Calculate the “adjusted” balance that should appear in the Allowance for Doubtful Accounts (AFDA) on the December 31^st financial statements.

Answer rating: 100% (QA)

The Adjusted balance of Allowance for doubtful account ... View the full answer