Answer:
$7,500
Explanation:
Data given in the question
Balance of the account receivable = $45,000
Allowance for doubtful account balance = $400 debit
Sales = $1,500,000
Estimated percentage is 0.5% of sales
So, the estimated bad debt expense is
= Sales revenue × estimated percentage
= $1,500,000 × 0.5%
= $7,500
The journal entry is as follows
Bad debt expense A/c Dr $7,500
To Allowance for doubtful debts $7,500
(Being bad debt expense is recorded)