Answer:
$5,800
Explanation:
Finish Co. uses the allowance method to account for bad debts. At the end of 2010,
Finish Co.'s un-adjusted trial balance shows an accounts receivable balance of $30,000;
allowance for doubtful accounts balance of $200 (credit);
and sales of $600,000.
Based on history, Finish estimates that bad debts will be 1% of sales.
The entry to record estimated bad debts will include a debit to Bad Debts Expense in the amount of:_______.
Total Bad debts at year end = 1% of Sales = 0.01 x 600,000 = $6,000
Amount of Allowance for Doubtful accounts = $200
Therefore the debit to Bad Debts Expense in the amount of $6000 - $200 = $5,800
