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Modern Office has $3,000,000 of credit sales for the year and $50,000 of outstanding accounts receivable...

Modern Office has $3,000,000 of credit sales for the year and $50,000 of outstanding accounts receivable and $1,000 balance of Allowance for Doubtful Account(AFDA) on December 31.

Modern Office estimates that either 0.1% of credit sales or 8% of outstanding receivables will not be collectible and wants to set up an Allowance for Doubtful Account(AFDA).





How much is the bad debt expense for the year under the Percentage of accounts receivable (balance sheet) Approach?

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