off all bad debts. Ull 3. Claireco use the allowance method to write 281/17 an a

Question

off all bad debts. Ull 3. Claireco use the allowance method to write 281/17 an aged accounts receivable indicated that bad debt expense ould be $35,000. The balance in the Allowance account ntha date was a credit of $8,000. It was also estimated that the bad 400 expense for the year would be 1% of the years credit sales of $4,000,000. Required: A. Assume that you want to inform the banking industry what your bad debt exposure will be, make the journal entry required on 12/31/17 B. Assume that you want to inform the-banking-industry what your bad debt exposure will be, make the journal entry required on 12/31/17

Explanation / Answer

Answer should remain same for A & B. In case of any query, feel free to ask.

A & B) Journal Entry as on 31-Dec-17 Total bad debt allowance required is 35000+40000=75000 Already credit balance of allowance is 8000 So balance allowance to be created is 67,000 Bad debt A/c ____________Dr 67000         To Bad debt Allowance A/c 67000

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