Question: Farr Co elects to use the percentage of sales basis in 2017
Farr Co. elects to use the percentage-of-sales basis in 2017 to record bad debt expense. It estimates that 2% of net credit sales will become uncollectible. Sales revenues are $800,000 for 2017, sales returns and allowances are $40,000, and the allowance for doubtful accounts has a credit balance of $9,000. Prepare the adjusting entry to record bad debt expense in 2017.
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