(LO 5) The unadjusted trial balance at year-end for a company that uses the perc
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Question
(LO 5) The unadjusted trial balance at year-end for a company that uses the percent of receivables method to determine its bad debts expense reports the following selected amounts:
All sales are made on credit. Based on past experience, the company estimates 2.0% of ending account receivable to be uncollectible. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?
Multiple Choice
Debit Bad Debts Expense $4,500; credit Allowance for Doubtful Accounts $4,500.
Debit Bad Debts Expense $14,500; credit Allowance for Doubtful Accounts $14,500.
Debit Bad Debts Expense $8,600; credit Allowance for Doubtful Accounts $8,600.
Debit Bad Debts Expense $7,200; credit Allowance for Doubtful Accounts $7,200.
Debit Bad Debts Expense $10,000; credit Allowance for Doubtful Accounts $10,000.
Accounts receivable $ 430,000 Debit Allowance for Doubtful Accounts 1,400 Debit Net Sales 2,250,000 CreditExplanation / Answer
Debit Bad Debts Expense $10,000; credit Allowance for Doubtful Accounts $10,000. Dear Student Thank you for using Chegg Please find below the answer and please give thumbs up Statementshowing Computations Paticulars Amount Ending Accounts Receivable 430,000.00 Allowance for doubtful accounts Cr = 430,000*2% 8,600.00 Existing balance Dr 1,400.00 More allowance required = 8600 - (-1400) 10,000.00 Debit Bad Debts Expense $10,000; credit Allowance for Doubtful Accounts $10,000.
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