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What is the balance of the allowance for doubtful accounts

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As an interim measure, Rickard Manufacturing Inc. calculates its allowance for doubtful accounts based on 3%of credit sales on a monthly basis. It then uses the balance sheet approach to estimate the required year-end allowance for doubtful accounts.

The following data are available for the 11 months ending November 30, 20X5:

  • Total sales for the 11 months ending November 30 20X5 $4,000,000
  • Credit sales as a percentage of total sales 80%
  • Allowance for doubtful accounts January 1, 20X5 $60,000
  • CR Collection of accounts written of in prior years $9,000
  • Customer accounts written off as uncollectable $35,000 between January 1 and November 30, 20X5

Question 1: What is the balance of the allowance for doubtful accounts for Rickard as at November 30, 20X5?

Option a) $ 96,000

Option b) $121,000

Option c) $130,000

Option d) $154,000

Reference no: EM132582591

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