Davidoff Company Reported Net Credit of $735,000 on Account for the Year

question 186

Multiple Choice

Davidoff Company reported net credit of $735,000 on account for the year ending December 31,2016.On January 1,2016,the Allowance for Doubtful Accounts had a credit balance of $18,000.During 2016,$30,000 of uncollectible accounts receivable were written off.Davidoff has experienced bad debt losses of 3% of credit sales in prior periods.Using the percentage of credit sales method,what is the adjusted balance in the Allowance for Doubtful Accounts at December 31,2016?

• A) $10,050
• B) $10,500
• C) $22,050
• D) $34,500

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Definitions:

Debits And Credits

Accounting entries that are used to record transactions, where debits increase asset or expense accounts and decrease liability, equity, and revenue accounts, while credits do the opposite.

Income Statement

A financial statement that reports a company's financial performance over a specific period, detailing revenues, expenses, and net income.

Statement Of Owner's Equity

A financial document showing the changes in the equity of a company during a specific period, through investments, withdrawals, and net income or loss.

Balance Sheet

A financial statement that summarizes an entity's assets, liabilities, and shareholders' equity at a specific point in time.