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Roster Co. adjusts its Allowance for Doubtful Accounts at year end. The general ledger balances for the Accounts Receivable and the related allowance account before adjustment were $1,500,000 and $45,000, respectively. Roaster estimates its necessary balance in its Allowance for Doubtful Accounts as 4% of the Accounts Receivable balance. What amount should Roaster record as an adjustment to its Allowance for Doubtful Accounts at year end

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Cricetus

Answer:

"$15,000" is the appropriate answer.

Explanation:

Debts opening balance,

= $45,000

According to the question,

The allowance to be created for the doubtful accounts will be:

= [tex]1500000\times 4 \ percent[/tex]

= [tex]1500000\times 0.04[/tex]

= [tex]60,000[/tex] ($)

hence,

The balance amount to be created will be:

= [tex]60000-45000[/tex]

= [tex]15,000[/tex] ($)

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