Question

E7.9 (LO3) (Computing Bad Debts and Preparing Journal Entries) The trial balance before adjustment of Estefan Inc. shows the following balances.

Accounts Receivable $80.000 (D)

Allowance for Doubtful Accounts $1.750 (D)

Sales Revenue (net, all on credit) $580.000 (K)

Instructions

Give the entry for estimated bad debts assuming that the allowance is to providefor doubtful accounts on the basis of (a) 4% of gross accounts receivable and (b)5% of gross, accounts receivables and allowance for Doubtful accounts has a$1,700 credit balance.

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