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Question 5 Star Beer Inc.'s experience indicates that Star will fail to collect 3% of net credit sales, which totaled $100,000 during the three-month period
Question 5 Star Beer Inc.'s experience indicates that Star will fail to collect 3% of net credit sales, which totaled $100,000 during the three-month period January to March of 2011. During this period, Star wrote off $4,000 of its accounts receivable as uncollectible. Required: 1. Record Star's uncollectible-account expense for January to March under: i. The allowance method. ii. The direct write-off method. (6 marks) 2. Explain what is bad debt and how it works in the accounting world? (6 marks)
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