Question

The Allowance for Bad Debts account has a credit balance of $ 3 comma 000$3,000 before the adjusting entry for bad debts expense. The​ company's management estimates that 44​% of net credit sales will be uncollectible for the year 2019. Net credit sales for the year amounted to $ 290 comma 000$290,000. What is the amount of Bad Debts Expense reported on the income statement for​ 2019?

Answer 1

Answer:

The bad debt expense which should be recorded in the income statement for the year 2019, amounts to $127,600

Explanation:

The bad debt expense which should be recorded in the income statement for the year 2019 is computed as:

= Net Credit Sales × Uncollectible credit sales for the year 2019

where

Net Credit Sales is $290,000

Uncollectible credit sales for the year 2019 is 44%

Putting the values in the above formula:

= $290,000 × 44%

= $127,600