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What is the journal entry needed to adjust the allowance

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Question - Siew Lan uses the allowance method to record bad debts expense. At the end of December, it is estimated that 2% of Siew Lan's accounts receivable will be uncollectable.

Accounts receivable at 31 December are $300,000 and the Allowance for doubtful debts has a credit balance of $5,000.

What is the journal entry needed to adjust the allowance for doubtful debts at the end of December?

a. Dr Bad debts expense $6,000 Cr Allowance for Doubtful Debts $6,000

b. Dr Bad debts expense $1,000 Cr Allowance for Doubtful Debts $1,000

c. Dr Allowance for Doubtful Debts $6,000 Cr Bad Debts Expense $6,000

d. Dr Allowance for Doubtful Debts $1,000 Cr Bad debts expense $1,000

e. There is no need to adjust the allowance for doubtful debts.

Reference no: EM132608529

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