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16 June, 05:08

During the current year, Sun Electronics, Incorporated, recorded credit sales of $780,000. Based on prior experience, it estimates a 2 percent bad debt rate on credit sales. a. On November 13 of the current year, an account receivable for $380 from a prior year was determined to be uncollectible and was written off. b. At year-end, the appropriate bad debt expense adjustment was recorded for the current year.

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  1. 16 June, 05:12
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    Answer and Explanation:

    According to the scenario, computation of the given data are as follow:-

    Effects on transaction:-

    Transactions Assets Amount ($) Stockholder's equity Amount ($)

    a. Accounts receivable ($380) Bad-debt expense (780,000*2%) ($15,600)

    Allowance for doubtful accounts $380

    b. Allowance for doubtful accounts = ($780,000 * 2:100) = ($15,600)
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