Massey Co. uses the percentage of accounts receivable basis to record bad debt expense, and concludes that
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Massey Co. uses the percentage of accounts receivable basis to record bad debt expense, and concludes that \(1 \%\) of accounts receivable will become uncollectible. Accounts receivable are \(\$ 500,000\) at the end of the year, and the allowance for doubtful accounts has a credit balance of \(\$ 3,000\).
(a) Prepare the adjusting journal entry to record bad debt expense for the year.
(b) If the allowance for doubtful accounts had a debit balance of \(\$ 800\) instead of credit balance of \(\$ 3,000\), determine the amount to be reported for bad debt expense.
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Related Book For
Financial Accounting
ISBN: 9780471169208
2nd Edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
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