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4 January, 14:37

At the end of the first year of operations, Gaur Manufacturing had gross accounts receivable of $348,000. Gaur's management estimates that 7% of the accounts will prove uncollectible. What journal entry should Gaur record to establish an allowance for uncollectible accounts?

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  1. 4 January, 16:09
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    The journal entry is shown below:

    Bad debt expense A/c Dr $24,360

    To Allowance for doubtful debts $24,360

    (Being bad debt expense is recorded)

    The computation of the bad debt expense is shown below:

    = Gross accounts receivable * estimated percentage given

    = $348,000 * 7%

    = $24,360

    We debited the bad debt expense and credited the allowance for doubtful debts account so that the correct posting can be done
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