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Elliot Inc. has the following unadjusted account balances at December 31, 2015:
Required:
- Assume Elliot estimates that two per cent of its sales will not be collected.
- What amount of bad debt expense will be reported on Elliot’s income statement at December 31, 2015?
- What amount of allowance for doubtful accounts will be reported on Elliot’s balance sheet at December 31, 2015?
- Assume Elliot estimates that five per cent of accounts receivable will not be collected.
- What amount of bad debt expense will be reported on Elliot’s income statement at December 31, 2015?
- What amount of allowance for doubtful accounts will be reported on Elliot’s balance sheet at December 31, 2015?
- Which calculation provides better matching: that made in question 1 or in question 2? Why?
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