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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

Respuesta :

TomShelby

Answer:

C. $32,000.

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

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