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On December 31, 2020, Chris's Car Racing Corporation had the following account balances prior to recording adjusting entries: Accounts receivables $46,600 $200 Allowance for doubtful
On December 31, 2020, Chris's Car Racing Corporation had the following account balances prior to recording adjusting entries: Accounts receivables $46,600 $200 Allowance for doubtful accounts During the year, the company had $400,000 of credit sales and write-offs of $180. Below is an aging schedule of the accounts receivables: Age Amount Loss Rate Not due $35,000 2% 30 - 60 days $10,000 10% 60+ days overdue $1,600 25% a. Use the aging method to estimate bad debt expense for the year. b. What is the ending balance in the allowance for doubtful accounts? c. Prepare the journal entries: o To recognize the write-off o To recognize bad debt expense. d. Explain why the "loss percent" increases as the age of the account increases in the above aging schedule
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