At each calendar year-end, Mazie Supply Co. uses the percent of accounts receivable method to estimate bad debts. On December 31, 2013, it has outstanding accounts receivable of $111,500, and it estimates that 3% will be uncollectible.
Prepare the adjusting entry to record bad debts expense for year 2013 under the assumption that the Allowance for Doubtful Accounts has
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(a)
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a $1,896 credit balance before the adjustment.
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(b)
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a $558 debit balance before the adjustment.
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Adjusting entries (all dated December 31, 2013).
Prepare the adjusting entry to record bad debts expense for year 2013 under the assumption that the Allowance for Doubtful Accounts has a $1,896 credit balance before the adjustment.