Grayson Co. (GC) uses the percentage of sales method for estimating bad debts for monthly reporting purposes.
Question:
Grayson Co. (GC) uses the percentage of sales method for estimating bad debts for monthly reporting purposes. On January 1, 2017, the allowance for doubtful accounts balance was $5,000 Cr. GC had credit sales of $100,000 for the month of January, and, in the past, 1.5% of credit sales have not been collected. During the month, the company wrote off $3,000 of accounts receivable relating to bankrupt customers.
Required:
What should be the balance in the allowance for doubtful accounts on January 31?
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
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