providing for doubtful accounts\nat the end of the current year, the accounts receivable account has a…

providing for doubtful accounts\nat the end of the current year, the accounts receivable account has a balance of $3,225,000 and sales for the year total $42,500,000.\ndetermine the amount of the adjusting entry to provide for doubtful accounts under each of the following independent assumptions:\na. the allowance account before adjustment has a negative balance of $(15,500). an aging of the accounts in the customer ledger indicates estimated doubtful accounts of $200,000.\nb. the allowance account before adjustment has a positive balance of $6,000. an aging of the accounts in the customer ledger indicates estimated doubtful accounts of $255,000.\n\nt check my work\na & b. under the analysis of receivables method, allowance for doubtful accounts is the focus of the estimation process. the amount of the adjusting entry is the amount that will yield an adjusted balance for allowance for doubtful accounts equal to that estimated by the aging schedule. so, if the unadjusted balance of the allowance account has a negative balance, this will be subtracted from the estimated doubtful account estimate, and if the unadjusted balance has a positive balance it will be added to the estimated doubtful account estimate to determine the adjustment.

providing for doubtful accounts\nat the end of the current year, the accounts receivable account has a balance of $3,225,000 and sales for the year total $42,500,000.\ndetermine the amount of the adjusting entry to provide for doubtful accounts under each of the following independent assumptions:\na. the allowance account before adjustment has a negative balance of $(15,500). an aging of the accounts in the customer ledger indicates estimated doubtful accounts of $200,000.\nb. the allowance account before adjustment has a positive balance of $6,000. an aging of the accounts in the customer ledger indicates estimated doubtful accounts of $255,000.\n\nt check my work\na & b. under the analysis of receivables method, allowance for doubtful accounts is the focus of the estimation process. the amount of the adjusting entry is the amount that will yield an adjusted balance for allowance for doubtful accounts equal to that estimated by the aging schedule. so, if the unadjusted balance of the allowance account has a negative balance, this will be subtracted from the estimated doubtful account estimate, and if the unadjusted balance has a positive balance it will be added to the estimated doubtful account estimate to determine the adjustment.

Answer

Explanation:

Step1: Calculate adjusting entry for case a

The estimated doubtful - accounts is $200,000$ and the unadjusted balance of the allowance account is a negative $15,500$. We need to make the allowance account balance equal to the estimated doubtful - accounts. So we add the absolute value of the negative balance to the estimated amount. $200000+| - 15500|=200000 + 15500=215500$

Step2: Calculate adjusting entry for case b

The estimated doubtful - accounts is $255,000$ and the unadjusted balance of the allowance account is a positive $6,000$. We subtract the positive unadjusted balance from the estimated amount to get the adjusting entry amount. $255000−6000 = 249000$

Answer:

a. $215,500$ b. $249,000$