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Answer to Question No BD 1(a): Being write off of accounts receivables. Debit : Allowance for uncollectible accounts $64,000 Credit: Accounts receivable $64,000 Being bad debt expense for the year. Debit : Bad Debt Expense $46,000 Credit: Allowance for uncollectible accounts $46,000
Computation of bad debt expense for the year: Allowance for uncollectible accounts b/f 1/1/05 $68,000 Less: Receivables written off ($64,000) Balance, before adjusting entry for 2005 bad debts $ 4,000 Required Allowance:2% x $2,500,000 ($50,000) Bad Debt expense $46,000 Answer to Question BD No.1(b): Balance Sheet As At 31 st December 2005 Accounts receivables, net of $50,000 in allowance for uncollectible accounts $2,450,000 |
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