Doe Company's Accounts Receivable account has a balance of $400,000 at the end of the year, and the company estimates the Net Realizable Value of Accounts Receivable to be $384,000. The Allowance for Doubtful Accounts has a balance of $9,000 at the beginning of the current year, and during the year, the company wrote off $7,500 of accounts receivable.
The year-end adjustment would require:

Question

Quizplus · Accepted Answer

The required allowance at year-end is $16,000 ($400,000 - $384,000). The beginning balance was $9,000, and $7,500 was written off, leaving $1,500. Therefore, an additional $14,500 is needed to reach the required $16,000.

Doe Company's Accounts Receivable Account Has a Balance of $400,000