Question

History indicates that 4 % of a company's accounts receivable are uncollectible. The balance of accounts receivables is $ 304,169. If Allowance for Doubtful Accounts has a $ 2,047 credit balance, the adjustment, rounding to the nearest one dollar, to record the estimate for bad debts for the period will require a credit to the Allowance of Doubtful Accounts of $ ___

Answer 1

The required credit to the Allowance for Doubtful Accounts, considering a 4% uncollectible rate and the existing $2,047 credit balance, is $10,120.

Step-by-step explanation:

The adjustment to record the estimate for bad debts for the period with a 4% uncollectible rate and a $304,169 balance in accounts receivable, that also considers the existing $2,047 credit balance in Allowance for Doubtful Accounts, would require a credit to the Allowance for Doubtful Accounts of $10,120.

To determine the amount to be credited to the Allowance for Doubtful Accounts, we calculate 4% of the total accounts receivable: 0.04 x $304,169 = $12,167. Next, we adjust this figure by the existing credit balance in the allowance account: $12,167 - $2,047 = $10,120, which is the required adjustment, rounded to the nearest dollar.