Question
Prepare entry using allowance method. LO8 Massey Ltd uses the allowance method to record bad debts expense and concludes, using the ageing of accounts receivable
Prepare entry using allowance method. LO8 Massey Ltd uses the allowance method to record bad debts expense and concludes, using the ageing of accounts receivable method, that 1% of accounts receivable will become uncollectable. Accounts receivable are $500000 at the end of the year, and the allowance for doubtful debts has a credit balance of $3000. (a) Prepare the adjusting journal entry to record bad debts expense for the year. (b) If the allowance for doubtful debts had a debit balance of $800 instead of a credit balance of $3000, determine the amount to be reported for bad debts expense
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