Ask Question
23 January, 20:08

The Allowance for Doubtful Accounts account has a year-end credit balance, prior to adjustment, of $450. The bad debts are estimated at 3% of $650,000, the net credit sales. After the appropriate adjusting entry for bad debts, what will be the balance of the Allowance for Doubtful Accounts account?

+2
Answers (1)
  1. 23 January, 20:16
    0
    Answer:$19500

    Explanation:

    The provision for doubtful debts accounts is an account that shows the amount of estimated debts that are expected to go bad at the end of the year. The estimated amount at the end of a year is debited to income account, credited to debtors account and left as a credit balance on the provision for doubtful debts accounts.

    If at the end of a new year a new estimate is made which differs from the current estimated figure, then the account is adjusted to show the entire new estimate and that is why the answer to the question is 3% of $650,000 = $19,500.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “The Allowance for Doubtful Accounts account has a year-end credit balance, prior to adjustment, of $450. The bad debts are estimated at 3% ...” 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