What allowance for doubtful accounts at december

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At December 31, 2012, Chambers Co. has gross accounts receivable of $127,000. There is a $10,000 credit balance in the allowance for doubtful accounts at the beginning of the year. During the year, the company had sales of $480,000, 30% of which were credit sales. The company uses the percentage of sales basis to estimate bad debt expense. Historically, bad debt expense has averaged 1.5% of credit sales. Actual write-offs of accounts receivable for 2012 amount to $ 3,240.

Problem 1: The allowance for doubtful accounts at December 31, 2012 is:

a. $12,160

b. $ 8,920

c. $15,400

d. None of the other alternatives are correct

e. $10,000

 

Reference no: EM132808343

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