Question

In 2022 the Cheyenne Corp. had net credit sales of $870000. On January 1, 2022, the Allowance for Doubtful Accounts had a credit balance of $21600. During 2022, $32700 of uncollectible accounts receivable were written off. Past experience indicates that the allowance should be 5% of the balance in receivables (percentage-of-receivables basis). If the accounts receivable balance at December 31 was $227000, what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2022

Answer 1

$22,450

Step-by-step explanation:

Bad debt Expense will be calculated using the percentage of debt loss. The expense will be calculated using the account receivable balance

Beginning bal. of Allowance for Doubtful Accounts ($21,600)

- Uncollectible Accounts Receivable written off $32,700

Adjustment of Allowance for Doubtful Accounts $11,100

Accounts receivable balance at December 31 $11,350

+ Adjustment of Allowance for Doubtful Accounts $11,100 Adjustment to Allowance for Doubtful Accounts $22,450

at December 31, 2022