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Credit Losses Based on Credit Sales Smith & Sons uses the allowance methodof handling its credit losses. It estimates credit losses at two percent of creditsales, which were $1,900,000 during the year. On December 31, the AccountsReceivable balance was $300,000, and the Allowance for Doubtful Accounts hada credit balance of $21,400 before adjustment.Show how Accounts Receivable and the Allowance for Doubtful Accounts wouldappear in the December 31 balance sheet.(Do not use negative signs with your answers.)FinCurrent Assets:Accounts Receivable$ 240,600eli-LE9,400Less: Allowance for Doubtful Accounts$81.200

Question
Credit Losses Based on Credit Sales Smith & Sons uses the allowance method
of handling its credit losses. It estimates credit losses at two percent of credit
sales, which were $1,900,000 during the year. On December 31, the Accounts
Receivable balance was $300,000, and the Allowance for Doubtful Accounts had
a credit balance of $21,400 before adjustment.
Show how Accounts Receivable and the Allowance for Doubtful Accounts would
appear in the December 31 balance sheet.
(Do not use negative signs with your answers.)
Fin
Current Assets:
Accounts Receivable
$ 240,600
eli-LE9,400
Less: Allowance for Doubtful Accounts
$81.200
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Credit Losses Based on Credit Sales Smith & Sons uses the allowance method of handling its credit losses. It estimates credit losses at two percent of credit sales, which were $1,900,000 during the year. On December 31, the Accounts Receivable balance was $300,000, and the Allowance for Doubtful Accounts had a credit balance of $21,400 before adjustment. Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear in the December 31 balance sheet. (Do not use negative signs with your answers.) Fin Current Assets: Accounts Receivable $ 240,600 eli-LE9,400 Less: Allowance for Doubtful Accounts $81.200

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Step 1

Given: Opening balance of Account receivable= $300,000

                        Bad-debts                                              = $21,400

                        Sales                                                      = $1,900,000

                        Credit losses are 2% of credit sales

Step 2

Credit losses based on sales= (1,900,000 × 2) ÷ 100

                                            = $38,000

Total Bad debts expenses for this year= $38,000 + $21,400

                                                          &...

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