Prepare the adjusting journal entry for bad debt expense

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Reference no: EM132676472

Splish Brothers Inc. uses the percentage-of-receivables basis to record bad debt expense and concludes that 3% of accounts receivable will become uncollectible. Accounts receivable are $402,700 at the end of the year, and the allowance for doubtful accounts has a credit balance of $2,897.

Problem (a) Prepare the adjusting journal entry to record bad debt expense for the year.

Problem (b) If the allowance for doubtful accounts had a debit balance of $989 instead of a credit balance of $2,897, prepare the adjusting journal entry for bad debt expense.

Reference no: EM132676472

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