Question

For the year ended 31 December 2019, Key Ltd reported opening and closing balances in the Allowance for doubtful debts accoun
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Answer #1

Answer:

Correct option is a. $467000.

Explanation:

Bad debts Expense for current period = Opening balance of Allowance for doubtful Accounts + Write off bad debts expense - Ending balance of allowance for doubtful Accounts

= $723000 + $648000 - $904000

= $467000.

Note: Allowance for doubtful Accounts has a credit balance and when write off bad debts expense then following entry will be passed:

Bad debts expense Account .... Debit

Allowance for doubtful Accounts ... Credit

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