In 2022, the Golic Co.had net credit sales of $900,000.On January 1, 2022, the Allowance for Doubtful Accounts had a credit balance of $22,500.During 2022, $36,000 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 $240,000, what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2022?
A)$24,000.
B)$37,500.
C)$46,500.
D)$36,000.

Question

Quizplus · Accepted Answer

The required allowance is 10% of $240,000, which is $24,000. The existing balance after write-offs is $22,500 - $36,000 = -$13,500. The adjustment needed is $24,000 - (-$13,500) = $37,500.