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Sav [38]
3 years ago
14

Johnson Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense is established as a

percentage of credit sales. For 2018, net credit sales totaled $5,800,000, and the estimated bad debt percentage is 1.40%. The allowance for uncollectible accounts had a credit balance of $55,000 at the beginning of 2018 and $46,500, after adjusting entries, at the end of 2018. Required: 1. What is bad debt expense for 2018 as a percent of net credit sales
Business
1 answer:
vredina [299]3 years ago
6 0

Answer:

Bad debt expense for 2018 is $81,200

Explanation:

2018 net credit sales = $5,800,000

Estimated bad debt percentage = 1.40%.

The allowance for uncollectible accounts had a credit balance of $55,000 at the beginning of 2018 and $46,500, after adjusting entries, at the end of 2018.

Bad debt expense = Estimated bad debt percentage × net credit sales

= 1.40% × $5,800,000

= $ 81,200

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