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Determine the estimated bad and doubtful debt expense

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Question - Protective Clothing Pty Ltd deals in work uniforms. All sales are conducted on a credit basis and no cash discounts are given. Assume that the business uses the allowance method to account for bad debts. The Allowance for Doubtful Debts account had a credit balance of $31,740 at 1 July 2019 and Accounts Receivable had an opening debit balance of $350,000.

The business determines to set the Allowance of Doubtful Debt balance amounting to 4% of net credit sales at 30 June 2020.

The business is registered for GST.

The following information was extracted from the accounting records at 30 June 2020:

Sales (GST Excluded) $855,000

Sales returns and allowances (GST Excluded) 101,400

Cash collected 106,192

Accounts receivable to be written off (GST Inclusive) 26,544

Required - Prepare the adjusting entry to determine the estimated bad and doubtful debt expense on 30 June 2020?

Reference no: EM132565296

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