Question

In 2017, Patterson Wholesale Company had net credit sales of $750,000. On January 1, 2017, Allowance for Doubtful Accounts had a credit balance of $18,000. During 2017, $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-receivables basis). If the accounts receivable balance at December 31 was $200,000, what is the required adjustment to Allowance for Doubtful Accounts at December 31, 2017?

A. $20,000.
B. $75,000.
C. $32,000.
D. $30,000

Answer 1

C. $32,000.

Step-by-step explanation:

Deceber 31th Accounts Receivables $200,000

expected uncollectible accounts: 10% --> $ 20,000

Allowance for doubful accounts T-accounts

DEBIT CREDIT

Beg 18,000

write-off 30,000

adjustment X

Ending 20,000

We solve for the adjustment:

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

adjustment = 32,000