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Thread: Accounting Question

  1. #1

    Lightbulb Accounting Question

    Company uses the allowance method for recording its expected credit losses. It estimates credit losses at 5% of credit sales which were $900,000 during the year. On December 31, the Accounts Receivable balance was $150,000 and the Allowance for Doubtful Accounts had a credit balance of $20,200 before adjustment.



    How do I calculate what the Allowance for Doubtful Accounts was
    BEFORE the adjustment?

    I tried 20200 * 5% and then added it together. I also tried subtracting 20200 from 900k. I looked at book and videos for help but there are no questions similar and the book only gives a definition. I did the rest. thank you!

  2. #2
    Elite Member
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    Quote Originally Posted by helpmepls! View Post
    Company uses the allowance method for recording its expected credit losses. It estimates credit losses at 5% of credit sales which were $900,000 during the year. On December 31, the Accounts Receivable balance was $150,000 and the Allowance for Doubtful Accounts had a credit balance of $20,200 before adjustment.



    How do I calculate what the Allowance for Doubtful Accounts was
    BEFORE the adjustment?

    I tried 20200 * 5% and then added it together. I also tried subtracting 20200 from 900k. I looked at book and videos for help but there are no questions similar and the book only gives a definition. I did the rest. thank you!
    This is not a site for accounting. You will probably get better help from a site oriented to technical questions on accounting.

    But if the credit balance before adjustment is GIVEN as 20,200 dollars before adjustment, it does not take an accountant to answer the question of what was the balance before adjustment.

  3. #3
    Elite Member stapel's Avatar
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    Cool

    Quote Originally Posted by helpmepls! View Post
    Company uses the allowance method for recording its expected credit losses. It estimates credit losses at 5% of credit sales which were $900,000 during the year. On December 31, the Accounts Receivable balance was $150,000 and the Allowance for Doubtful Accounts had a credit balance of $20,200 before adjustment.

    How do I calculate what the Allowance for Doubtful Accounts was
    BEFORE the adjustment?

    I tried 20200 * 5% and then added it together. I also tried subtracting 20200 from 900k. I looked at book and videos for help but there are no questions similar and the book only gives a definition.
    What was the definition?

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