Question

A newly created design​ business, Teri's​ Art, is finishing its first year of operations. During the​ year, credit sales were $ 43 comma 000 and collections of credit sales were $ 34 comma 000. One account for $ 675 was written off.​ Teri's Art uses the agingminusofminusreceivables method to account for bad debts expense. It has estimated $ 250 as uncollectible at yearminusend. What is the amount of the Bad Debts Expense for the first year of​ operations?

Answer 1

Answer:

$ 925

Explanation:

Data provided:

Credit sales = $ 43,000

Collection of credits = $ 34,000

Amount written off = $ 675

Estimated uncollectible amount at the year end = $ 250

Now,

the bad debt expenses will be the total amount that has not be recovered back

i.e the amount written off + uncollectible amount

or

bad debt expenses = $ 675 + $ 250 = $ 925