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8 March, 01:22

Crane, Inc. had net sales in 2020 of $1,488,400. At December 31, 2020, before adjusting entries, the balances in selected accounts were Accounts Receivable $206,300 debit, and Allowance for Doubtful Accounts $3,260 credit. If Crane estimates that 7% of its receivables will prove to be uncollectible. Prepare the December 31, 2020, journal entry to record bad debt expense.

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  1. 8 March, 02:53
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    The journal entry to record the bad debt expense is shown below:

    Bad debt expense A/c Dr $11,181

    To Allowance for doubtful debts $11,181

    (Being bad debt expense is recorded)

    The computation of the bad debt expense is shown below:

    = (Accounts receivable * estimated percentage given) - (credit balance of Allowance for Doubtful Accounts)

    = ($206,300 * 7%) - ($3,260)

    = $14,441 - $3,260

    = $11,181
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