Find the amount of adjustments should be made

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Reference no: EM132782785

Problem - ABC Ltd. has a credit balance of $1,000 for the allowance for doubtful debts account at the end of the year, prior to the year-end adjustment and bad debt written-off. The bad debts are estimated following the aging schedule. Based on past experience, ABC Ltd. determines the percentage of expected credit losses in each age group as follows:

	Percentage of expected credit losses	Amount of Accounts Receivable
Not yet due	1%	$8,200
1-30 days past due	3%	$1,500
31-50 days past due	10%	$4,000
61-90 days past due	20%	$1,000
Over 90 days past due	50%	$800

In addition, during this year, one of ABC Ltd.'s customers has gone bankrupt and is unable to pay back a balance of $200. Find the amount of adjustments should be made to the bad debt expense at the end of the period?

a. $527

b. $327

c. $927

d. $1,127

Reference no: EM132782785

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