In 2021, Chandler Company Had Net Credit Sales of $1,125,000

question 105

Multiple Choice

In 2021, Chandler Company had net credit sales of $1,125,000.On January 1, 2021, the Allowance for Doubtful Accounts had a credit balance of $27,000.During 2021, $42,000 of uncollectible accounts receivable were written off.Past experience indicates that the allowance should be 10% of the balance in receivables (percentage-of-receivables basis) .If the accounts receivable balance at December 31 was $380,000, what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2021?

• A)$23,000
• B)$38,000
• C)$53,000
• D)$97,500

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Definitions:

Situational Analysis

It refers to the process of identifying internal and external factors that affect an organization's performance, aimed at informing strategic planning.

Strategic Decisions

High-level choices made by an organization's leadership concerning the overall direction and objectives of the company.

Financial Projections

Estimates of a company's future revenues, expenses, and profitability, often used for budgeting, fundraising, and strategic planning.

Franchising

A business model whereby the owner (franchisor) of a product, service, or method obtains distribution through affiliated dealers (franchisees).