Question
As at 30 December 2020, accounts receivable amounted to $49,000 (being gross amounts of $50,000, net of allowance for doubtful accounts of $1,000). At this
As at 30 December 2020, accounts receivable amounted to $49,000 (being gross amounts of $50,000, net of allowance for doubtful accounts of $1,000).
At this date, 90% of the accounts receivable were not yet overdue, and the remaining 10% were overdue within one month.
This is estimated that 3% of accounts receivable not overdue are estimated to be uncollectible, and 5% of those overdue within one month are estimated to be uncollectible.
No journal entry was posted regarding bad debt expense for the year ended 31 December 2020.
Required:
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(a) Calculate the required allowance for doubtful accounts as at 31 December 2020.
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(b) Prepare the journal entry (for the bad debt expense) for year 2020.
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