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El Mona plc reports the following financial Information before adjustments. Accounts receivable Allowance for doubtful accounts Debit 70,000 Credit 1500 Sales 400,000 Sales returns
El Mona plc reports the following financial Information before adjustments. Accounts receivable Allowance for doubtful accounts Debit 70,000 Credit 1500 Sales 400,000 Sales returns and allowances 6,000 Required 1) Prepare the journal entry to record Bad Debt Expense assuming Duncan Company estimates bad debts at 5% of accounts receivable. [2 mark] 2) Assume that all the information above is the same, except that the Allowance for Doubtful Accounts has a debit balance of 2,500 instead of a credit balance. How will this difference affect the journal entries in part (a)? Show your calculations. [2 mark]
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