Ask Question
11 December, 02:45

Net credit sales for the month are $4,000,000 for Marx Clothiers. Its accounts receivable balance is $160,000. The allowance is calculated as 7.5% of the receivables balance using the percentage of receivables basis. The Allowance for Doubtful Accounts has a credit balance of $5,000 before adjustment. How much is the balance of the allowance account after adjustment?

+3
Answers (1)
  1. 11 December, 03:10
    0
    Credit balance of $12,000

    Explanation:

    To calculate the balance of the allowance for doubtful accounts we need to multiply the total accounts receivable times the percentage of estimated bad debts:

    $160,000 x 7.5% = $12,000

    Since allowance for doubtful accounts is a contra asset account, when it increases it should be credited.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Net credit sales for the month are $4,000,000 for Marx Clothiers. Its accounts receivable balance is $160,000. The allowance is calculated ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers