On December 31, 2019 before adjusting entries, Accounts Receivable for California Company had a debit balance of $200,000, and the Allowance for Doubtful Accounts had a credit balance of $6,000. Credit sales for the year were $1,600,000.

If credit losses are estimated at 1% of credit sales:

a. The balance of the Allowance for Doubtful Accounts will be $10,000 after adjustment.

b. The balance of the Allowance for Doubtful Accounts will be $22,000 after adjustment.

c. The balance of the Allowance for Doubtful Accounts will be $16,000 after adjustment.

d. Bad Debts Expense for the year will be $22,000.

Question

Business

Hayden Blake

10 April, 11:50

On December 31, 2019 before adjusting entries, Accounts Receivable for California Company had a debit balance of $200,000, and the Allowance for Doubtful Accounts had a credit balance of $6,000. Credit sales for the year were $1,600,000.

If credit losses are estimated at 1% of credit sales:

a. The balance of the Allowance for Doubtful Accounts will be $10,000 after adjustment.

b. The balance of the Allowance for Doubtful Accounts will be $22,000 after adjustment.

c. The balance of the Allowance for Doubtful Accounts will be $16,000 after adjustment.

d. Bad Debts Expense for the year will be $22,000.

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Answers (1)

Know the Answer?

Sean · Answer 1

Allowance for doubtful debts account:

Opening balance: $6,000

Add adjustments in the year?

Closing balance = 1% x $1,600,000 = $16,000

Adjustment in the year is $10,000

Balance closing the year is $16,000

Answer is C