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laurenppylant
22.03.2021 •
Business
Leo Co. uses the allowance method to account for bad debts. At the end of the year, Leo Co.'s accounts receivable balance is $25,000; allowance for doubtful accounts balance of $100 (debit balance); and sales of $500,000. Based on history, Leo estimates that bad debts will be 2% of accounts receivable. The entry to record estimated bad debts will include a debit to Bad Debts Expense in the amount of: Multiple choice question.
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Ответ:
$400
Explanation:
A bad debt expense will be recognized by a company when the company cannot collect its receivable due to the fact that a customer cannot pay back their debt and fulfill their obligation.
Therefore, the estimated bad debts will be computed below:
= ($25,000 × 2% - $100)
= $500 - $100
= $400
Then, the journal entry to record the estimated bad debt expense will be:
Debit: Bad debt expense A/c $400
Credit: Allowance for doubtful debts $400
Ответ: