Answer:
A.$26,850
B.$28,200
C.$80,550
D.$53,000
Explanation:
Calculation to Determine the amount of the adjusting entry to provide for doubtful accounts under each of the assumptions
A.) We are using net sales as a basis, therefore the balance in the allowance account is ignored.
$10,740,000 x 1% x 1/4 = 26,850
26,850- 12,800
= 14,050 adjustment
B.) We are using Accounts Receivables as the basis, therefore the balance in the allowance account needs to be considered.
41,000 - 12,800 = 28,200 adjustment
C.) Since allowance account before adjustment has a debit balance of $5,700 in which Bad debt expense is estimated at 3/4 of 1% of net sales. The adjustment will be:
10,740,000 x 1% x 3/4 =80,550
80,550 - 5,700 = 74,850 adjustment
D.) Since we have a debit balance, the adjustment would be :
47,300+ 5,700 = 53,000
