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The following information is from the 2017 records of Lane Bicycle​ Shop: Accounts​ receivable, December​ 31,...

The following information is from the 2017 records of Lane Bicycle​ Shop:

Accounts​ receivable, December​ 31, 2017

​$41,000 (debit)

Allowance for Bad​ Debts, December​ 31, 2017

prior to adjustment

​1,500 (debit)

Net credit sales for 2017

​180,000

Accounts written off as uncollectible during 2017

​20,000

Cash sales during 2017

​27,000

Bad debts expense is estimated by the​ aging-of-receivables method. Management estimates that​ $6,000 of accounts receivable will be uncollectible. Calculate the ending balance of Allowance for Bad​ Debts, after the adjustment for bad debts​ expense, at December​ 31, 2017.

explain please

Solutions

Expert Solution

Allowance for doubtful debts will show a credit balance of $6000

Debit in P/L is calculated as follows

Allowance for doubtful debts required for next year 6000

Bad debts during the year                 20000

Add Allowance for doubtful debts beginning of the year 1500

Total                                                                    $ 27500

Beginning balance is usually deducted,Usually credit balance, but here the balance is debit so it is added

ekkarill92 answered 2 years ago
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