Adjustment to allowance for doubtful accounts-credit balance

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In 2008, the Fit Co. had net credit sales of $750,000. On January 1, 2008, Allowance for Doubtful Accounts had a credit balance of $16,000. During 2008, $30,000 of uncollectible accounts receivable were written off. Past experience indicates that the allowance should be 10% of the balance in receivables (percentage of receivable basis). If the accounts receivable balance at December 31 was $200,000, what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2008?

(1) $20,000

(2) $34,000

(3) $36,000

(4) $30,000

Reference no: EM13148617

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