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    crazyitalian143's Avatar
    crazyitalian143 Posts: 6, Reputation: 1
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    #1

    Apr 16, 2007, 07:06 AM
    Journal Entry
    On dec 31st company determines that bad debts are expected to total $2000. Need journal entry
    goldenbutterfly's Avatar
    goldenbutterfly Posts: 63, Reputation: 8
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    #2

    Apr 16, 2007, 07:12 AM
    You have to try to answer first.:)
    crazyitalian143's Avatar
    crazyitalian143 Posts: 6, Reputation: 1
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    #3

    Apr 16, 2007, 07:15 AM
    Dr bad debt
    Cr capital
    goldenbutterfly's Avatar
    goldenbutterfly Posts: 63, Reputation: 8
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    #4

    Apr 16, 2007, 07:23 AM
    Ok, I hope you should try harder though... In crediting capital, you are adding to it 2000 which does not make any sense.

    dr. Bad Debts Expense 2000
    Cr. Allowance for Doubtful Accounts 2000

    You credit allowance for doubtful accounts since 2,000 is only an estimate of bad debts, meaning it is still uncertain. It becomes a contra-asset to the Accounts Receivable.
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