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Soln4-07 - PROBLEM SOLUTIONS 4-1 Accounts Receivable...

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Problem Solutions – Chapter 4 105 PROBLEM SOLUTIONS 4-1 Accounts Receivable Transactions Journal entries: a. Accounts Receivable 5,600,000 Sales Revenue 5,600,000 b. Bad Debt Expense* 56,000 Allowance for Bad Debts 56,000 c. Allowance for Bad Debts 68,400 Accounts Receivable 68,400 d. Accounts Receivable 9,600 Allowance for Bad Debts 9,600 Cash 9,600 Accounts Receivable 9,600 e. Bad Debt Expense** 8,000 Allowance for Bad Debts 8,000 * 1% x $5,600,000 = $56,000 **Allowance account analysis: Allowance for Bad Debts 18,800 68,400 56,000 9,600 8,000 24,000 (2% x $1,200,000) An additional $8,000 credit is needed to bring the balance up to $24,000
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