A company had the following items and amounts in its unadjusted trial balance as of December 31 of the current year:
Prepare the adjusting entry to estimate bad debts assuming bad debts are estimated to be 2.5% of credit sales.
Definitions:
Available-for-Sale
A classification for investments in debt or equity securities not classified as held-to-maturity or trading securities, marked to market with changes in fair value recorded in other comprehensive income.
Dividend Revenue
Income earned from owning shares in a company, typically distributed from the company's earnings.
Trading Securities
Financial instruments such as stocks or bonds that are purchased by a company with the intention of selling them in the short term to realize quick profits.
Unrealized Loss
A loss that results from holding onto an asset that has decreased in price, but has not yet been sold or actualized through closure of the position.
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