Beebo Ltd Provides for Doubtful Accounts Based on 6% of Credit

question 96

Essay

Beebo Ltd. provides for doubtful accounts based on 6% of credit sales. The following data are available for 2021.
$$\begin{array} { | l | r | } \hline \text { Credit sales during } 2021 & \$ 3,550,000 \\\hline \text { Allowance for doubtful accounts, Jan 1, 2021 } & 59,000 \mathrm { Cr } \\\hline \text { Collection of accounts written off in prior years } & 3,500 \\\hline \text { Customer accounts written off as uncollectable during } 2021 & 37,000 \\\hline\end{array}$$ How much should the balance in the allowance for doubtful accounts be at December 31, 2021?

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Definitions:

Price Takers

Entities in a market that accept the prevailing prices for its goods or services, having no power to influence the market price.

Demand Curves

A graphical representation of the relationship between the price of a good and the quantity demanded by consumers, typically downward sloping, indicating that demand decreases as price increases.

Supply Curve

The Supply Curve is a graphical representation showing the relationship between the price of a good or service and the quantity of that good or service that a supplier is willing and able to supply.

Marginal Cost Curve

A graph that shows the cost of producing one more unit of a good or service at each level of production.