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Prepare the journal entry to recognize bad debts

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Reference no: EM132700395

Kandel Company had the following data available for 2016 (before making any adjustments):

Accounts receivable, 12/31/16$330,000.00 (Dr.)

Allowance for doubtful accounts3,600.00 (Cr.)

Net credit sales, 2016840,000.00 (Cr.)

Required:

Question 1: Prepare the journal entry to recognize bad debts under the following assumptions: (a) bad debts expense is expected to be 2.00% of net credit sales for the year and (b) Kandel expects it will not be able to collect 5.00% of the balance in accounts receivable at year-end.

Question 2: Assume instead that the balance in the allowance account is a $3,600.00 debit. How will this affect your answers to part (1)?

Reference no: EM132700395

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