In 2014, the Dugan Co. had net credit sales of $750,000. On January 1, 2014, Allowance for Doubtful Accounts had a credit balance of $16,000. During 2014, $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, 2014?

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The required adjustment to the Allowance for Doubtful Accounts is $34,000. The allowance should be 10% of the balance in receivables, which is $200,000. Therefore, the allowance should be $20,000. The current balance in the allowance is $16,000, so the required adjustment is $34,000.