Reference no: EM132315766

Question : Calculating Bad Debts

At January 1, 2017, the credit balance of Culver Corporation's Allowance for Doubtful Accounts was $410,000. During 2017, the bad debt expense entry was based on a percentage of net credit sales. Net sales for 2017 were $80 million, of which 89% were on account. Based on the information available at the time, the 2017 bad debt expense was estimated to be 0.77% of net credit sales.

During 2017, uncollectible receivables amounting to $486,000 were written off against the allowance for doubtful accounts. The company has estimated that at December 31, 2017, based on a review of the aged accounts receivable, the allowance for doubtful accounts would be properly measured at $522,000.

Required:

a) Prepare schedule calculating the balance in Culver Corporation's Allowance for Doubtful Accounts at December 31, 2017.

b) Prepare journal entry at year-end to adjust the allowance for doubtful accounts to the required balance.