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16 September, 12:48

Ivanhoe, Inc. had net sales in 2020 of $1,410,300. At December 31, 2020, before adjusting entries, the balances in selected accounts were Accounts Receivable $348,200 debit, and Allowance for Doubtful Accounts $2,940 credit. If Ivanhoe estimates that 10% 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. 16 September, 13:20
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    The Journal entry is as follows:

    On December 31, 2020

    Bad debt expense A/c Dr. $31,880

    To allowance for doubtful accounts $31,880

    (To record bad debt expense)

    Workings:

    Accounts Receivable = $348,200

    Allowance for Doubtful Accounts = $2,940

    If Ivanhoe estimates that 10% of its receivables will prove to be uncollectible, then

    Bad debt expense:

    = (Accounts Receivable * 10%) - Allowance for Doubtful Accounts

    = ($348,200 * 10%) - $2,940

    = $34,820 - $2,940

    = $31,880
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