Answer:
a. Adjustment for bad debts expenses in scenario a - $ 32,900
b. Adjustment for bad debts expenses in scenario b - $ 22,700
c. Adjustment for bad debts expenses in scenario c - $ 72,700
d. Adjustment for bad debts expenses in scenario d - $ 73,500
Explanation:
Computation of bad debts adjustment under scenario a
Receivables balance $ 762,000
Sales <u>$ 8,640,000</u>
Estimated bad debts expenses 1/2 % of sales $ 43,200
Pre adjustment balance of allowance for uncollectible <u>$ ( 10,300)</u>
Adjustment to provide doubtful accounts $ 32,900
Computation of bad debts adjustment under scenario b
Estimated bad debts expenses based on ageing $ 33,000
Pre adjustment balance of allowance for uncollectible <u>$ ( 10,300)</u>
Adjustment to provide doubtful accounts $ 22,700
Computation of bad debts adjustment under scenario c
Receivables balance $ 762,000
Sales <u>$ 8,640,000</u>
Estimated bad debts expenses 3/4 % of sales $ 64,800
Pre adjustment balance of allowance for uncollectible DR. <u>$ 7,900</u>
Adjustment to provide doubtful accounts $ 72,700
The pre adjustment balance is a debit balance of $ 7,900, so it has to be added to the required allowance balance
Computation of bad debts adjustment under scenario d
Estimated bad debts expenses based on ageing $ 65,600
Pre adjustment balance of allowance for uncollectible DR <u>$ 7,900</u>
Adjustment to provide doubtful accounts $ 73,500
The pre adjustment balance is a debit balance of $ 7,900, so it has to be added to the required allowance balance
