Answer:
Correct answer is D, P3,900
Explanation:
Begging Allowance for doubtful account is P1,500 (96,000 - 94,500). Ending balance of Allowance for doubtful account is P3,000 (P108,000 -P105,000). We can now work back the provision for doubtful accounts that the company has made during 2008.
Beginning P1,500
Add:
Collection of written off accounts 800
Total P2,300
Less:
Written off 3,200
Total (P900)
Therefore, in order for the company to have an ending inventory of P3,000, They must have set up a provision for doubtful accounts in the amount of P3,900. Attached herewith is the T-account of allowance for doubtful accounts
