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E 7 . 9 ( LO 5 ) ( Calculating Bad Debts and Preparing Journal Entries ) The trial balance before adjustment of Chloe Inc.,
ELO Calculating Bad Debts and Preparing Journal Entries The trial balance before adjustment of Chloe Inc., reporting under ASPE, includes the following balances: Instructions a Prepare the entry for bad debt expense for the current year for each of the following scenarios: The allowance should be of gross accounts receivable. Historical records show that, based on accounts receivable aging, the following percentages will not be collected: Allowance for Doubtful Accounts is $ but it is a credit balance and the allowance should be of gross accounts receivable. Allowance for Doubtful Accounts is $ but it is a credit balance and historical records show that the same percentages in part are to be used to determine the Allowance for Doubtful Ac counts. b From the perspective of an independent reviewer of Chloe's trial balance, comment on the unad justed debit balance in Chloe's allowance for doubtful accounts at year end. c Digging Deeper Assume Chloe reports under IFRS and has adopted IFRS Should Chloe's ap proach to determining its Allowance for Expected Credit Losses consider "lifetime expected credit losses"? What is meant by this concept? Would a percentageofsales approach be appropriate for determining the Allowance for Expected Credit Losses under IFRS Why or why not?
ELO Calculating Bad Debts and Preparing Journal Entries The trial balance before
adjustment of Chloe Inc., reporting under ASPE, includes the following balances:
Instructions
a Prepare the entry for bad debt expense for the current year for each of the following scenarios:
The allowance should be of gross accounts receivable.
Historical records show that, based on accounts receivable aging, the following percentages will
not be collected:
Allowance for Doubtful Accounts is $ but it is a credit balance and the allowance should be
of gross accounts receivable.
Allowance for Doubtful Accounts is $ but it is a credit balance and historical records show
that the same percentages in part are to be used to determine the Allowance for Doubtful Ac
counts.
b From the perspective of an independent reviewer of Chloe's trial balance, comment on the unad
justed debit balance in Chloe's allowance for doubtful accounts at year end.
c Digging Deeper Assume Chloe reports under IFRS and has adopted IFRS Should Chloe's ap
proach to determining its Allowance for Expected Credit Losses consider "lifetime expected credit
losses"? What is meant by this concept? Would a percentageofsales approach be appropriate for
determining the Allowance for Expected Credit Losses under IFRS Why or why not?
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