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You are auditing accounts receivable and the client informed you that it uses the allowance...

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Accounting

  1. You are auditing accounts receivable and the client informed you that it uses the allowance method. The client estimates that 2% of all receivable balance is uncollectible. You are provided with the following information: Accounts receivable balance - $50,000

Allowance for doubtful account - $750

  1. Determine if the allowance account balance is reasonable and if not, propose an adjusting entry to address the deficiency.

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