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Problem 1: Determine the amount to be added to Allowance for Doubtful Accounts in each of the following cases and indicate the ending balance in each case.
a. Credit balance of $440 in Allowance for Doubtful Accounts just prior to adjustment. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $8,180.
b. Credit balance of $440 in Allowance for Doubtful Accounts just prior to adjustment. Bad debt expense is estimated at 2% of credit sales, which totaled $1,162,000 for the year.
Financial Statement Analysis and Preparation
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