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Gomez, Inc. sells machinery and equipment to warehouses.Most sales are on account. On April 1, 2017, the company has a debit balance of $220,000 in
Gomez, Inc. sells machinery and equipment to warehouses.Most sales are on account. On April 1, 2017, the company has a debit balance of $220,000 in accounts receivable and a credit balance of $10,500 in the allowance for doubtful accounts.
During the second quarter (from April 1 through June 30, 2017), Gomez records the following activities:
- Total sales of $260,000. $25,000 are in cash, and the remainder is on account.
- Collections from customers for previous credit sales totaling $240,000.
- Write-offs of two accounts as uncollectible: one for $3,200 and one for $1,700.
- Total other expenses of $165,500.
Based on historical averages and expectations about the economy going forward, Gomez calculates bad debt expense as 3.5% of credit sales during the period.
Calculate the following:
- The bad debt expense for the quarter ended June 30, 2017.
- The balance of accounts receivable on June 30, 2017.
- The balance of the allowance for doubtful accounts on June 30, 2017.
- The net accounts receivable balance on June 30, 2017.
- The net income for the quarter ended June 30, 2017.
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