At the end of the year, two similar companies were in the process of calculating bad debt expense for the year. Each company had credit sales of P 1,000,000 and a debit balance in Allowance for Uncollectible Accounts of P 2,000 before any year-end adjustment. The amount of

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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At the end of the year, two similar companies were in the process of calculating bad debt expense for the year. Each company had credit sales of P 1,000,000 and a debit balance in Allowance for Uncollectible Accounts of P 2,000 before any year-end adjustment. The amount of accounts receivable written off during the year for both companies was P 8,000. The balance of Accounts Receivable is P 180,000. A Company estimates that 5% of accounts receivable will not be collected over the next year. B Company estimates that 5% of credit sales will not be collected over the next year.

Required: For each company, determine:

a) The uncollectible accounts expense for the year.

b) The adjusting entry to be made of December 31.

c) The balance in Allowance for Doubtful Accounts after adjustment

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