Net credit sales for the month are $800,000. The accounts receivable balance is $160,000. The allowance is calculated as 7.5% of the receivables stability using the percentage of receivables basis. If the Allowance for Doubtful Accounts has a credit stability of $5,000 before adjustment, what is the balance after adjustment

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Answers:    7.5% of the $160,000 receivable set off is $12,000, this amount is added to the $5,000 Allowance for Doubtful Accounts for an ending credit balance of $17,000. The debit of $5,000 go to Bad Debt Expense.
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