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6 June, 12:49

Blue Corporation uses the allowance method to account for uncollectible receivables. At the beginning of the year, Allowance for Bad Debts had a credit balance of $ 800. During the year Blue wrote off uncollectible receivables of $ 1 comma 700. Blue recorded Bad Debts Expense of $ 2 comma 600. What is Blue's year-end balance in Allowance for Bad Debts? A. $ 3 comma 400 B. $ 4 comma 300 C. $ 1 comma 700 D. $ 900

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  1. 6 June, 15:48
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    c. $1,700

    Explanation:

    The computation of balance in Allowance for Bad Debts is shown below:-

    Beginning Allowance for bad debts = $800

    Current period bad debts expenses = $2,600

    Written off during the period = $1,700

    Allowance for bad debts, at year end = Beginning Allowance for bad debts + Current period bad debts expenses - Written off during the period

    = $800 + $2,600 - $1,700

    = $1,700

    Therefore for computing the Allowance for bad debts, at year end we simply applied the above formula.
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