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6 March, 21:07

4. Harney Inc. uses the percentage of credit sales method of estimating doubtful accounts. The Allowance for Doubtful Accounts has an unadjusted credit balance of $5,700 and the company had $290,000 of net credit sales during the period. Harney has experienced bad debt losses of 6% of credit sales in prior periods. After making the adjusting entry for estimated bad debts, what is the ending balance in the Allowance for Doubtful Accounts account?

a. $11,700.

b. $17,400.

c. $11,400.

d. $23,100.

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  1. 6 March, 21:15
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    a. $11,700.

    Explanation:

    The computation of the ending balance in the Allowance for Doubtful Accounts is shown below:

    = Net credit sales * estimated percentage - unadjusted credit balance

    = $290,000 * 6% - $5,700

    = $17,400 - $5,700

    = $11,700

    We simply deducted the credit balance from the estimated value so that the accurate amount can come

    All other information which is given is not relevant. Hence, ignored it
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