Adjustment to the allowance for doubtful accounts

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In 2012, MPGJ Wholesale Company had net credit sales of $850,000. On January 1, 2012, Allowance for Doubtful Accounts had a $20,000 credit balance. During 2012, $25,000 of uncollectible accounts receivable were written off. Past experience indicates that the allowance should be 10% of the balance in receivables (percentage of receivables basis). If the accounts receivable balance at December 31 was $350,000, what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2012?

a) $40,000

b) $35,000

c) $30,000

d) $85,000

Reference no: EM13143987

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