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Sheffield Corp. has outstanding accounts receivable totaling $6.36 million as of December 31 and sales on credit during the year of $25.2 million. There is
Sheffield Corp. has outstanding accounts receivable totaling $6.36 million as of December 31 and sales on credit during the year of $25.2 million. There is also a debit balance of $11500 in the allowance for doubtful accounts. If the company estimates that 8% of its outstanding receivables will be uncollectible, what will be the balance in the allowance for doubtful accounts after the year-end adjustment to record bad debt expense?
The correct aswer is $6360000 0.08 = $508800.
Why do we ignore the debit balance of 11500 in this case?
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