Question

In 2007 the Fitzu Co. had net credit sales of $750,000. On January 1, 2007, Allowance for Doubtful Accounts had a credit balance of $16,000. During 2007, $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, 2007?a. $20,000.b. $34,000.c. $36,000.d. $30,000.

Answer 1

B. $34,000.

Step-by-step explanation:

(200,000 * 0*10) + (30,000 - 16,000)

20,000 + 14,000 = $34,000