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Do adjusting entry on december to increase the allowance

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C&N Ltd, is a manufacturer that makes all sales on a 30-days credit terms. Annual sales are approximately $25 million. At the end of 2016 accounts receivable were presented in the company's Balance Sheet as below:

Accounts Receivable $2,350,000

Less: Allowance for Doubtful accounts $70,000

  • During 2017, $740,000 in accounts receivable were written off as uncollectible. Of these amounts written off, receivables totaling $24,000 were unexpectedly collected. At the end of 2017, an aging of accounts receivable indicated a need for an $80,000 allowance to cover possible failure to collect the accounts currently outstanding.
  • C&N Ltd makes adjusting entries in its accounting records only at year end.

Question:

Question 1: Do an adjusting entry on 31 December 2017 to increase the allowance for doubtful accounts to $80,000.

Reference no: EM132574664

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