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20 January, 05:30

At the end of the year, Mark Inc. estimates future bad debts to be $6,500. The Allowance for Uncollectible Accounts has a credit balance of $2,500 before any year-end adjustment. What adjustment should Mark Inc. record for the estimated bad debts at the end of the year?

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  1. 20 January, 07:16
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    The adjustment entry to record estimated bad debts is shown below:

    Bad debt expense A/c Dr $4,000

    To Allowance for Uncollectible Accounts $4,000

    (Being record of estimated bad debts is made)

    The computation of estimated bad debt is computed below:

    = Estimated future bad debts - credit balance of Allowance for Uncollectible Accounts

    = $6,500 - $2,500

    = $4,000
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