Problem
In 2005, Lawrence Company had gross sales of $750,000 on account and granted sales discounts of $15,000. On January 1, 2005, the Allowance for Doubtful Accounts account had a credit balance of $18,000. During 2005, $30,000 of uncollectible accounts receivable were written off. Past experiences indicate that 3% of net credit sales become uncollectible. Using the percentage of net credit sales method, what would be the adjusted balance in the Allowance for Doubtful Accounts at December 31, 2005?