XXX uses the allowance method to write off all bad debts. On 12/31/15 an aged accounts receivable indicated that bad debt expense would be $55,000. The balance in the Allowance account on that date was a credit of $6,000. It was also estimated that the bad debts expense for the year would be 2% of the years credit sales of $3,000,000.
Required:
A) Assume that you want to inform the banking industry what your bad debt exposure will be, make the journal entry required on 12/31/15.
B) Assume that you want to inform the stockholders what your bad debt expense will be, make the required journal entry on 12/31/15.
