Question
As an interim measure, Rickard Manufacturing Inc. calculates its allowance for doubtful accounts based on 3% of credit sales on a monthly basis. It then
As an interim measure, Rickard Manufacturing Inc. calculates its allowance for doubtful accounts based on 3% of credit sales on a monthly basis. It then uses the balance sheet approach to estimate the required year-end allowance for doubtful accounts. The following data are available for the 11 months ending November 30, 20X5:
Total sales for the 11 months ending November 30 20X5 | $4,000,000 |
Credit sales as a percentage of total sales | 80% |
Allowance for doubtful accounts January 1, 20X5 | $60,000 CR |
Collection of accounts written of in prior years | $9,000 |
Customer accounts written off as uncollectable between January 1 and November 30, 20X5 | $35,000 |
What is the balance of the allowance for doubtful accounts for Rickard as at November 30, 20X5?
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Financial Reporting and Analysis
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon
6th edition
9780077632182, 78025672, 77632184, 978-0078025679
