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The FFC recognizes bad debt expenses as 25% of total sales. When accounts are considered to be uncollectible they are written off against the"allowance".

During 20x4,FFC had total sales of $1,5000,000. In addition, FM Enterprises has declared bankruptcy and it appears their account for $650 will be uncollectible.

1. Prepare the journal entry to record bad debt expense

2. Prepare the journal entry to write off the FM Enterprises account

1 Answer

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  • 7 years ago
    Best Answer

    1.

    Debit Bad Debt Expense 375,000 [1,500,000 x 25%]

    Credit Allowance for Doubtful Accounts 375,000

    2.

    Debit Allowance for Doubtful Accounts 650

    Credit Accounts Receivable 650

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