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In 2018, Bramble Company had credit sales of $898000. On January 1, 2018, Allowance for Doubtful...

In 2018, Bramble Company had credit sales of $898000. On January 1, 2018, Allowance for Doubtful Accounts had a credit balance of $22400. During 2018, $36200 of uncollectible accounts receivable were written off. Past experience indicates that the allowance balance should be 12% of the accounts receivable become uncollectible. What should be the required adjustment to the Allowance for Doubtful Accounts at December 31, 2018 if the ending accounts receivable balance was $240000?

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Answer #1

Allowance for doubtful accounts, beginnings - $22,400

Accounts receivable, written off = $36,200

Allowance for doubtful accounts, ending (unadjusted) = Allowance for doubtful accounts, beginnings - Accounts receivable, written off

= 22,400-36,200

= $13,800 (debit)

Accounts receivable = $240,000

Allowance for doubtful accounts, ending = Accounts receivable x Estimated uncollectible percentage

= 240,000 x 12%

= $28,800

Bad debt expense = Allowance for doubtful accounts, ending + Allowance for doubtful accounts, ending (unadjusted)

= 28,800+13,800

= $42,600

Required adjustment to Allowance for doubtful accounts at December 31, 2018 = $42,600

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