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14 June, 13:09

Gonzalez Company has been in business several years. At the end of the current year, the ledger shows the following: Accounts Receivable $ 318,600 Dr. Sales Revenue 2,301,300 Cr. Allowance for Doubtful Accounts 6,600 Cr. Bad debts are estimated to be 5% of accounts receivables. Prepare the entry to adjust Allowance for Doubtful Accounts.

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  1. 14 June, 15:47
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    Allowance for Doubtful Accounts is $9330

    Explanation:

    given data

    Accounts Receivable = $318,600 Dr.

    Sales Revenue = 2,301,300 Cr.

    Allowance for Doubtful Accounts = 6,600 Cr.

    Bad debts estimated = 5% of accounts receivables

    to find out

    Prepare entry Allowance for Doubtful Accounts

    solution

    we get here required allowance that is

    required allowance = $318,600 * 5%

    required allowance = $15930

    so bad debt expense that is = required allowance - Allowance for Doubtful Accounts ... 1

    so bad debt expense that is $15930 - $6,600

    bad debt expense = $9330

    so

    particular debt credit

    bad debt expense $9330

    Allowance for Doubtful Accounts $9330
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