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alexandr1967 [171]
3 years ago
15

Libre, Inc. has experienced bad debt losses of 5% of credit sales in prior periods. At the end of the year, the balance of Accou

nts Receivable is $119,000 and the Allowance for Doubtful Accounts has an unadjusted credit balance of $1,450. Net credit sales during the year were $188,000. Using the percentage of credit sales method, what is the estimated Bad Debt Expense for the year
Business
1 answer:
Mama L [17]3 years ago
3 0

Answer:

The estimated bad debt expense for the year amounts to $9,400

Explanation:

The  estimated bad debt expense  for the year is computed as:

As the percentage of credit sales method is used for estimating the bad debt expense. Therefore, it is computed as:

Bad debt expense = Net Credit Sales × Estimate Percent

where

Net credit sales amounts to $188,000

Estimate percent is 5%

So, putting the values above:

Bad debt expense = $188,000 × 5%

Bad debt expense = $9,400

Therefore, the bad debt expense amounts to $9,400

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<u></u>

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collected from client                    170,000

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<u>operating activities: year 2</u>

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utilities                                             (55,000)

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billed - collected

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salaries           (100,000)

utilities            (40,000) (incurred cost)

insurance        (21,000)  (63,000 for three years, the value of 1 year is 21,000)

net income          32,000

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salaries           (110,000)

utilities            (50,000) (incurred cost)

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