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Schreiber Industries estimates bad debts at 2% of sales. Schreiber began the year with $270,000 of...

Schreiber Industries estimates bad debts at 2% of sales. Schreiber began the year with $270,000 of account receivable and $38,600 of allowance of bad debts. During the year, Schreiber had sales of $920,000, wrote off bad debts of $26,000, and received cash on account of $905,000. What amount of accounts receivable, net allowance for bad debts, should appear on the year-end balance sheet?

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Expert Solution

Account Receiavble                                                                                                                       270,000
Allowance for bad debt                                                                                                                         38,600
Current year sales                                                                                                                       920,000
Bad Debt 2%
Bad debts written off                                                                                                                         26,000
Cash Received                                                                                                                       905,000
Bad debt (For cy Sales)                                                                                                                         18,400
Allownace for Bad Debt Balance amount after adj. of bad debt written off                                                                                                                         12,600
Bad Debt provision to be created for cy                                                                                                                            5,800
Accounts Receivable opening balance -Bad debt written off +cy sales-Collection in cy
                                                                                                                      259,000
Allowance for bad debt                                                                                                                         18,400

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