Allowance Method of Accounting for Bad Debts—Comparison of the Two Approaches Kandel Company had… 1 answer below »

 
   

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Allowance Method of Accounting for Bad Debts—Comparison of the Two

Approaches

Kandel Company had the following data available for 2008 (before making any adjustments):

Required

1. Prepare the journal entry to recognize bad debts under the following assumptions: (a) bad

debts expense is expected to be 2% of net credit sales for the year and (b) Kandel expects it will

not be able to collect 6% of the balance in accounts receivable at year-end.

2. Assume instead that the balance in the allowance account is a $2,600 debit. How will this affect

your answers to (1)?