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9 March, 23:47

Mellon Corporation The data presented below is Mellon Corporation for the year ended December 31, 2015: Sales (100% on credit) $1,500,000 Sales returns 60,000 Accounts Receivable (December 31,2015) 250,000 Allowance for Doubtful Accounts [Credit Balance] (Before adjustment at December 31, 2015) 3,000 Estimated amount of uncollectible accounts based on an aging analysis 31,000 Refer to the data for Mellon Corporation. If Mellon uses the aging of accounts receivable approach to estimate its bad debts, what amount will be reported as bad debt expense for 2015

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  1. 10 March, 01:47
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    The bad debts expense for 2015 would be $ 28,000

    Explanation:

    The balance of the allowance for doubtful account should be equal to the amount estimated to be uncollectible based on the ageing analysis

    Estimated uncollectible account $ 31,000

    Allowance for doubtful accounts prior to adjustment $ 3,000

    Bad debts expense for the year to be recorded $ 28,000

    The accounting entry to record this is as follows:

    Bad debts expense Debit $ 28,000

    Allowance for uncollectible accounts Credit $ 28,000
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