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27 March, 12:55

Papa Bear Corporation's unadjusted trial balance includes the following balances (assume normal balances) : Accounts Receivable $1,119,000Allowances for Doubtful Accounts $ 21,300Bad debts are estimated to be 6% of outstanding receivables. What amount of bad debts expense will the company record? a. $67,140b. $45,840c. $44,562d. $68,418

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  1. 27 March, 13:13
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    b. $45,840

    Explanation:

    Bad debts are estimated = 6% x $1,119,000 = $67,140

    Bad debts are estimated based on outstanding receivables and Allowances for Doubtful Accounts before adjusting trial balance $21,300, so Bad debts expense the company will record:

    $67,140 - $21,300 = $45,840

    The entry will be:

    Debit Bad debts expense: $45,840

    Credit Allowances for Doubtful Accounts: $45,840
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