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Yakvenalex [24]
3 years ago
6

Creek Co. uses the percentage of credit sales method in determining its bad debt expense. The following information comes from t

he accounting records of Creek Co:
Cash sales $250,000
Credit sales 750,000
Total sales 1,000,000
Credit balance in the Allowance for Doubtful Accounts 2,000
Bad debt loss rate 3%
What is the estimate of bad debt expense?
a. $30,000.
b. $22.500.
c. $28,000.
d. $24,500.
Business
1 answer:
Afina-wow [57]3 years ago
5 0

Answer:

b. $22.500.

The estimate of bad debt expense is $22,500

Explanation:

Method of Bad Debt estimation = Percentage of credit sale

Bad Debt Expense = 3% of credit sale  ($750,000)

Bad Debt Expense = 3% x $750,000

Bad Debt Expense = $22,500

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