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Grogan & Sons uses the percentage of receivables method of estimating bad debt. It estimates that 1% of total accounts receivable will become uncollectible. Accounts
Grogan & Sons uses the percentage of receivables method of estimating bad debt. It estimates that 1% of total accounts receivable will become uncollectible. Accounts receivable at year end are $400,000. The allowance for doubtful accounts has a credit balance of $3,000.
a) Show your calculations and record the journal entry for the bad debt expense for the year end.
b) If the allowance for doubtful accounts had a debit balance of $800 instead determine the new amount to be reported for bad debt expense. Show your work
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