Question: Based on prior experience, GBI estimates that approximately ( 1 ) / ( 2 ) % of the net credit sales ( gross credit sales

Based on prior experience, GBI estimates that approximately

(1) / (2) %

of the net credit sales

(

gross credit sales minus returns of credit sales

)

for the month will become bad debt. GBI writes off bad debts as they occur and recognizes bad debt expense based on anticipated bad debts as an adjusting entry each month.

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