a) Calculation showing Required Doubtful Account at the end of 31 Dec
Amount of receivables | Uncollectible percentage | Amount of Doubtful Accounts |
396400 | 2 | 7928 |
277800 | 4 | 11112 |
48000 | 8.5 | 4080 |
6600 | 39 | 2574 |
2800 | 82 | 2296 |
Required Bal of dobtful A/c | 27990 | |
Add Opening Debit Balance | 3400 | |
New to be created | 31390 |
b) Adjusting Entry
Bad and Doubtful Debts A/c -----------------------Dr 31390
Doubtful Debts A/c ---------------------------------------31390
(Being Doubtful debts are created as on 31 Dec as per calculation)
Explanation:-
Allowance for doubtful debts should have credit balance as it is provision against receivables. as this account has debit balance which means some of the receivables actually become bad over and above the previous provision.
Therefore we have to add the debit balance in our current year calculations.
(IF we have opening credit balance we will subtract the same)
(1c) $27,000 2 Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its...
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