Exercise 7-9 The trial balance before adjustment of Indigo Inc. shows the follow

Question

Exercise 7-9 The trial balance before adjustment of Indigo Inc. shows the following balances. Accounts Receivable Allowance for Doubtful Accounts $87,800 2,450 Sales Revenue (all on credit) $707,800 Give the entry for estimated bad debts assuming that the allowance is to provide for doubtful accounts on the basis of (a) 4% of gross accounts receivable and (b) 5% of gross accounts receivable and Allowance for Doubtful Accounts has a $1,645 credit balance. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit SHOW LIST OF ACCOUNTS INK TO TEXT VIDEO: SIMILAR EXERCISE

Explanation / Answer

a Bad debts expense 5962 =(87800*4%)+2450       Allowance for Doubtful accounts 5962 b Bad debts expense 2745 =(87800*5%)-1645       Allowance for Doubtful accounts 2745

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