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AB Company, a resident foreign corporation using cash basis of accounting to report on a fiscal year ending every August 31, had the following account balances in its August 31, 2020 trial balance:
Credit
Sales AP8,000,000
Accounts Receivable (60% from resident clients)5,000,000
Allowance for bad debts300,000
For the year ending August 31, 2020, AB Company estimates a provision of 5% of receivables. AB Company was able to collect 80,000 from accounts that were previously written off
Problem 1: Compute for the deductible bad debt expense.
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