In 2011, Garrison Company had net credit sales of $1,125,000.On January 1, 2011, Allowance for Doubtful Accounts had a credit balance of $27,000.During 2011, $45,000 of uncollectible accounts receivable were written off.Past experience indicates that the allowance should be 10% of the balance in receivables (percentage of receivables basis).If the accounts receivable balance at December 31 was $300,000, what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2011?

Question

Quizplus · Accepted Answer

The required allowance is 10% of $300,000, which is $30,000. The existing balance after write-offs is $27,000 - $45,000 = -$18,000. Therefore, the adjustment needed is $30,000 - (-$18,000) = $48,000.

In 2011, Garrison Company Had Net Credit Sales of $1,125,000