Credit Losses Based on Credit Sales Smith & Sons uses the allowance method of handling its credit losses. It estimates credit losses at two percent of credit sales, which were $1,900,000 during the year. On December 31, the Accounts Receivable balance was $300,000, and the Allowance for Doubtful Accounts had a credit balance of $21,400 before adjustment.

Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear in the December 31 balance sheet.

(Do not use negative signs with your answers.)

	Current Assets:
	AnswerAccounts ReceivableLess: Allowance for Doubtful Accounts	300,000
	AnswerAccounts ReceivableLess: Allowance for Doubtful Accounts	21400
		278600

300,000 was right, the other two were incorrect!