A big component of sales is on credit to other retailers and distributors. The following summarises accounts
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Question:
A big component of sales is on credit to other retailers and distributors. The following summarises accounts receivable information for the year:
Ending balance of accounts receivable: $186,000 Dr
Beginning balance of “Allowance for doubtful debts”: $12,000 Cr
Ending balance of “Allowance for doubtful debts”: $5,580 Cr
Actual bad debt write-offs during the year: $14,000
(i) What was the estimated bad debt percentage (of ending balance of accounts
receivable) that was applied?
(ii) Show the required adjusting journal entry on 31st December 2020 to update the
‘Allowance for doubtful debts’ balance.
Related Book For
Management Accounting Information for Decision-Making and Strategy Execution
ISBN: 978-0137024971
6th Edition
Authors: Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, S. Mark Young
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