Net credit sales for the month are $900,000.The accounts receivable balance is $192,000.The allowance is calculated as 5% of the receivables balance using the percentage-of-receivables basis.If the Allowance for Doubtful Accounts has a credit balance of $6,000 before adjustment, what is the balance after adjustment?
A)$ 9,600
B)$ 3,600
C)$15,600
D)$ 9,900

Question

Quizplus · Accepted Answer

The required allowance is 5% of $192,000, which is $9,600. Since there is already a $6,000 credit balance, the adjustment needed is $3,600, resulting in a final balance of $9,600.

Net Credit Sales for the Month Are $900,000