Reference no: EM132678725

At January 1, 2020, the credit balance of Blue Spruce Corp.'s Allowance for Doubtful Accounts was $400,000. During 2020, the bad debt expense entry was based on a percentage of net credit sales. Net sales for 2020 were $79 million, of which 89% were on account. Based on the information available at the time, the 2020 bad debt expense was estimated to be 0.75% of net credit sales. During 2020, uncollectible receivables amounting to $496,500 were written off against the allowance for doubtful accounts. The company has estimated that at December 31, 2020, based on a review of the aged accounts receivable, the allowance for doubtful accounts would be properly measured at $520,500.

Problem 1: Prepare a schedule calculating the balance in Blue Spruce Corp.'s Allowance for Doubtful Accounts at December 31, 2020.