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16 January, 11:11

On June 30 (the end of the period), Brown Company has a credit balance of $2,360 in Allowance for Doubtful Accounts. An evaluation of accounts receivable indicates that the proper balance should be $28,690. Journalize the appropriate adjusting entry.

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  1. 16 January, 11:16
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    Dr Bad debt expense 26,330

    Cr Allowance for doubtful accounts 26,330

    Explanation:

    credit balance of allowance for doubtful accounts = $2,360

    the correct balance should be $28,690, so the account must be adjusted by $28,690 - $2,360 = $26,330

    Dr Bad debt expense 26,330

    Cr Allowance for doubtful accounts 26,330

    Allowance for doubtful accounts is a contra asset account with a credit balance that reduces the value of accounts receivable.
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