Final answer:
To calculate the estimate for bad debts, multiply the balance of accounts receivable by 12% to get the estimated uncollectible amount, then subtract the existing $1,687 credit balance. The resulting adjustment is a $46,736 credit to the allowance for doubtful accounts.
Step-by-step explanation:
The question asks to calculate the adjustment for estimated bad debts given a percent of uncollectible accounts and the balance of accounts receivable. History indicates that 12% of the company's accounts receivable are uncollectible. The balance of accounts receivables is $403,526. Currently, the allowance for doubtful accounts has a $1,687 credit balance.
To calculate the required adjustment, multiply the total accounts receivable by 12% to find the estimated amount uncollectible, then accordingly adjust the allowance for doubtful accounts.
Calculation: 0.12 × $403,526 = $48,423 (estimated uncollectible). The allowance for doubtful accounts should reflect this amount minus the existing credit balance of $1,687. So, the additional required adjustment is $48,423 - $1,687 = $46,736. Therefore, the adjustment to record the estimate for bad debts for the period will require a credit to the allowance for doubtful accounts of $46,736, rounding to the nearest one dollar.