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225ch6solutions - E 6–32(LO4 Estimating Bad Debts 1 Bad...

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Unformatted text preview: E 6–32 (LO4) Estimating Bad Debts 1. Bad debt expense = $3,900 + $1,300 = $5,200 2. Bad debt expense = ($66,400 × 4% = $2,656); $2,656 + $1,300 = $3,956 3. Bad debt expense = $350,000 × 1% = $3,500 ( Note: Any balance in Allowance for Bad Debts is ignored when using the percentage of sales method.) E 6–34 (LO4) Accounting for Uncollectible Accounts Receivable 1. Allowance for Bad Debts Write-offs 60,000 Beg. Bal. 50,000 Bad Debt Expense 120,000 End. Bal. 110,000 Answers: December 31, 2009 balance of Allowance for Bad Debts = $110,000 Bad debt expense for 2009 = $120,000 2. Accounts Receivable Beg. Bal. 900,000 Collections 4,500,000 Sales 5,000,000 Write-offs 60,000 End. Bal. 1,340,000 Answer: December 31, 2009 balance of gross Accounts Receivable = $1,340,000 E 6–35 (LO4) Aging of Accounts Receivable 0.5% × $720,000 = $ 3,600 3.0% × $395,000 = 11,850 16.0% × $105,000 = 16,800 52.5% × $52,000 = 27,300 92.0% × $13,000 = 11,960 $71,510 Balance needed $71,510 Prior balance 42,000 Adjustment needed $29,510 Journal Entry Bad Debt Expense.................................................................. 29,510 Allowance for Bad Debts..................................................
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225ch6solutions - E 6–32(LO4 Estimating Bad Debts 1 Bad...

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