Question

statement. Credit sales $678,000 Bad debt expense as a percentage of sales 2% Write-off of accounts receivable $1,000 Tax rate 30% Estimated tax payment $31,000 Incorrect income statement, for the year ended December 31 Sales $678,000 Expenses 549,200 Bad debt expense 1,000 Pretax income 127,800 Tax expense 38,340 Net income 89,460 1) What is the allowance for doubtful accounts in 20X1?

Answer 1

Answer:

12,560 allowancwe for doubtful accounts

Explanation:

The company will recognize an allowance for 2% of the credit saleS:

678,000 x 2% = 13,560

Now, we write-off for 1,000 this decrease the allowance

Thhs, the balance will be for the difference

13,560 - 1,000 = 12,560