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Compute bad debt expense at year-end

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Reference no: EM132569325

Assume the company estimates bad debts using the percentage-of-sales approach. At year-end, the company estimates that 8% of credit sales will become uncollectible.

a. Credit sales: $100,000

b. Collections on credit sales: $60,000

c. Write-offs of accounts deemed uncollectible: $4,000

d. Aging analysis of accounts deemed uncollectible at December 31, 2003, shows $8,000 of potentially uncollectible accounts.

Required:

Question a. Repeat requirements for parts (a) and (b) using the percentage-of-sales approach.

Compute the following at year-end:

1. Net accounts receivable

2. Bad debt expense

Question b. If the direct write-off approach were used, how would your entries be different?

Reference no: EM132569325

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