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4. As at June 30, 2016, the accounts receivable balance of Frodo Ltd. was $237,600, and the allowance for doubtful accounts had a credit balance
4. As at June 30, 2016, the accounts receivable balance of Frodo Ltd. was $237,600, and the allowance for doubtful accounts had a credit balance of $12,450. During the period from January 1 - June 30, the following transactions occurred, and have not yet been recorded: a. Pippen Inc. paid up a previously written-off account of $4,500 in full. b. Legolas Co. paid $2,500 of a $6,000 account that had been previously written off in full; it is expected that the remaining amount will be paid at some point in the future. c. Gollum Ltd. has refused to pay an outstanding balance of $2,600, and has since gone bankrupt. Frodo has decided to write off the amount. d. Frodo's policy is to record 1% of credit sales as bad debt expense. Credit sales for the period are $375,000. e. Based on experience, Frodo believes the ending balance in the allowance for doubtful accounts should be 10% of gross accounts receivable at the end of June, 2016. Required: Prepare the journal entries to account for the transactions listed above
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