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    Amount of the bad debt adjusting entry

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    Bando Company has a $300,000 balance in Accounts Receivable and a $4,000 debit balance in Allowance for Doubtful Accounts. Credit sales for the period totaled $1,800,000. What is the amount of the bad debt adjusting entry if Bando uses a percentage of credit sales basis (at 2%) or a percentage of receivables basis (at 10%)?
    % Credit Sales % Receivables
    a. $36,000 $30,000
    b. $40,000 $26,000
    c. $36,000 $34,000
    d. $32,000 $26,000

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    Solution Preview

    In credit sales, we do not look at the balance in the allowance account and the adjusting ...

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    The solution explains how to calculate the amount of the bad debt adjusting entry