Question

Pine Company provides for doubtful accounts expense at the rate of 2% of credit sales. The following data are available for 20X4: Allowance for doubtful accounts, 1/1/X4 $18,000 Accounts written off as uncollectible during 20X4 $20,000 Collection of accounts written off in prior years (customer credit was reestablished) $5,000 Credit sales year ended 12/31/X4 $1,500,000 The allowance for doubtful accounts balance at December 31, 20X4, should be

Answer 1

the allowance for doubtful account balance is $28,000

Step-by-step explanation:

The computation of the allowance for doubtful account balance is given below:

Allowance for Doubtful Doubts Balance

= Beg Balance + Bad Debt Expense - Accounts written off

= $18,000 + (2% of $1,500,000) - $20,000

= $18,000 + $30,000 - $20,000

= $28,000

hence, the allowance for doubtful account balance is $28,000