Account For Accounts Receivable And Allowance Practice Test

A for-profit medical supplies wholesaler reporting under U.S. GAAP (ASC 326) identifies internal control weaknesses in its receivables process, including delayed posting of customer payments and lack of timely review of past-due accounts. At year-end, the company reassesses collectability and concludes the allowance for credit losses should be increased by $22,000. What is the correct journal entry for adjusting the allowance for credit losses?

A for-profit distribution company reporting under U.S. GAAP estimates expected credit losses under ASC 326. At year-end, it has gross accounts receivable of $2,500,000 and an allowance for credit losses of $60,000 (credit). Based on updated expected loss information, management determines the allowance should be 3% of gross accounts receivable. What is the amount of the year-end adjustment to credit loss expense (debit) and allowance for credit losses (credit)?