Question

Example:

Accounts Receivable = $250,000
Allowance for Doubtful Accts = $2000 credit
Sales = $2,200,000
Bad Debt = 1/2 of 1% (.005)

Calculate year end adjustment amount:

Answer 1

The year-end adjustment amount for the Allowance for Doubtful Accounts can be calculated using the formula: Year-end adjustment amount = Total credit sales * Bad debt percentage - Allowance for Doubtful Accounts. Given the values provided, the year-end adjustment amount is $8,000.

Step-by-step explanation:

The year-end adjustment amount for the Allowance for Doubtful Accounts can be calculated using the formula:

Year-end adjustment amount = Total credit sales × Bad debt percentage - Allowance for Doubtful Accounts

Given that:

• Total credit sales = $2,200,000
• Bad debt percentage = 0.005
• Allowance for Doubtful Accounts = $2,000 (credit)

Substituting the values into the formula: Year-end adjustment amount = $2,200,000 × 0.005 - $2,000 = $8,000