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Question
You have just received notice that a customer with an account receivable balance has gone bankrupt and will not make any future payments. Assuming you use the allowance method, the entry you make is to
a. debit Bad Debt Expense and credit Allowance for Doubtful Accounts
b. debit Bad Debt Expense and credit Accounts Receivable
c. debit Allowance for Doubtful Accounts and credit Accounts Receivable
d. debit Allowance for Doubtful Accounts and credit Bad Debt Expense
Answer
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