Answer to Question #62546 in Accounting for Asif

Question

Balance Sheet of AA & Co. showed the following information as at December 31, 2005.

Account Receivables 225,300
Allowance for Doubtful Accounts 6,759
Following transactions took place during the year ended December 31, 2006.
Credit sales 1,245,500
Cash Sales 230,600
Cash collected 1,386,200
Doubtful accounts written off 2,300
Company has a policy of providing for 3% of outstanding Receivables as Allowance for doubtful accounts.

Required:
(a) Prepare the following accounts for the year as they would appear in the books of AA & Co. (Journal entries are not required) :

i) Accounts Receivable Account.
ii) Allowance for Doubtful Accounts.

(b) Compute the amount of allowance for doubtful accounts required at the end of the year.