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The ledger of the Blue Spruce Corp. at the end of the current year shows Accounts Receivable of $237,000.
a) If Allowance for Doubtful Accounts has a credit balance of $4,700 in the trial balance and bad debts are expected to be 9% of accounts receivable, journalize the adjusting entry for the end of the period. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Respuesta :

The adjusting entry for the end of the period is :

Provisions for doubtful debts Account .........dr.            16,630

   To Profit and loss Account                                                         16,630

Given,

At the end of the current year, Blue Spruce Corp.'s ledger displays $237,000 in accounts receivable.

The trial balance shows a credit balance of $4,700 for Allowance for Doubtful Accounts.

And 9% of accounts receivable are predicted to be bad debts.

Amount of bad debts = 9% × amount of Accounts Receivables

                                   = 9% × $2,37,000

                                   = $21,330

Since, there is already a provision for doubtful debts of $4,700.

We have to increase it by (21,330 - 4,700) $16,630.

Hence, The adjusting entry for the end of the period is :

Provisions for doubtful debts Account .........dr.            16,630

   To Profit and loss Account                                                         16,630

Learn more about Doubtful debts:

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