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    Cash and Receivables

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    The trial balance before adjustment of Adel Company reports the following balances:

    Dr. Cr.
    Accounts receivable $100,000
    Allowance for doubtful accounts $ 2,500
    Sales (all on credit) 650,000
    Sales returns and allowances 50,000

    my instructions are to
    (a)Prepare the entries for estimated bad debts assuming that doubtful accounts are estimated to be (1) 8% of gross accounts receivable and (2) 1½% of net sales.

    (b)Assume that all the information above is the same, except that the Allowance for Doubtful Accounts has a debit balance of $2,500 instead of a credit balance. How will this difference affect the journal entries in part (a)?

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    https://brainmass.com/business/receivables/cash-and-receivables-132046

    Solution Summary

    The trial balance before adjustment of Adel Company reports the following balances.

    $2.19