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11 November, 15:02

In 2007 the Fitzu Co. had net credit sales of $750,000. On January 1, 2007, Allowance for Doubtful Accounts had a credit balance of $16,000. During 2007, $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 receivable basis). If the accounts receivable balance at December 31 was $200,000 what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2007? a. $20,000. b. $34,000. c. $36,000. d. $30,000.

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  1. 11 November, 15:06
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    B. $34,000.

    Explanation:

    (200,000 * 0*10) + (30,000 - 16,000)

    20,000 + 14,000 = $34,000
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