Question: Foster Co. adjusted its allowance for bad debts at the end of the year. The general ledger balances for accounts receivable and the related allowance

Foster Co. adjusted its allowance for bad debts at the end of the year. The general ledger balances for accounts receivable and the related allowance account were $1,000,000 and $40,000, respectively. Foster uses the accounts receivable percentage method to estimate its allowance for bad debts. Accounts receivable were estimated at 5% uncollectible.

What amount should Foster record as an adjustment to his allowance for bad debts at the end of the year?

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