Assume that Simple Co. had credit sales of $250,000 and cost of goods sold of $150,000 for the period. Simple uses the aging method and estimates that the appropriate ending balance in the Allowance for Doubtful Accounts is $3,000. Before the end-of-period adjustment is made, the Allowance for Doubtful Accounts has a credit balance of $250.

Required Adjustment in Allowance for Doubtful Accounts $ 2750 credit

Explanation:

Simple Co.

Credit sales  $250,000

Cost of Goods Sold  $150,000

Allowance for Doubtful Accounts  Adjusted Balance$3,000

Allowance for Doubtful Accounts  $250 Credit

Required Adjustment in Allowance for Doubtful Accounts $ 2750

As the balance in the Allowance for Doubtful Accounts is $ 250 credit and we need $ 3000 credit by the end of the year the adjustment would be of $ 2750 credit

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