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prediction of doubtful debts,

prediction of doubtful debts,

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Tommy lawyers has decided to apply the allowance method to account for its bad debts. They also apply the percentage of credit sales method set at 6%. At the end of their first month of operations, March 2020, they record the following transaction: 31* March 2020 Debit Bad Debts Expense $7,200 Credit Allowance for Doubtful Debts $7,200 During April 2020, their total write-offs were: Debit Allowance for Doubtful Debts $13,300 Credit Accounts Receivable $13,300 The prediction percentage, used for April's prediction of doubtful debts, should be: Select one: a. less the 6%. O b. greater than 6%. O c. equal to 6% O d. 0%.
Transcribed Image Text:Tommy lawyers has decided to apply the allowance method to account for its bad debts. They also apply the percentage of credit sales method set at 6%. At the end of their first month of operations, March 2020, they record the following transaction: 31* March 2020 Debit Bad Debts Expense $7,200 Credit Allowance for Doubtful Debts $7,200 During April 2020, their total write-offs were: Debit Allowance for Doubtful Debts $13,300 Credit Accounts Receivable $13,300 The prediction percentage, used for April's prediction of doubtful debts, should be: Select one: a. less the 6%. O b. greater than 6%. O c. equal to 6% O d. 0%.
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