Question
The ledger of Maxx Company at the end of the current year shows Accounts Receivable $170,000, Sales Revenue $1,200,000, and Sales Returns and Allowances $50,000.
The ledger of Maxx Company at the end of the current year shows Accounts Receivable $170,000, Sales Revenue $1,200,000, and Sales Returns and Allowances $50,000.
(a) If Allowance for Doubtful Accounts has a credit balance of $3,500 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 10% of account receivable.
(b) If Allowance for Doubtful Accounts has a debit balance of $370 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be 6% of accounts receivable
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