Question

During the​ year, credit sales amounted to $ 840,000. Cash collected on credit sales amounted to $ 790,000​, and $ 18,000 has been written off. At the end of the​ year, the company adjusted for bad debts expense using the percent-of-sales method and applied a​ rate, based on past​ history, of 2.5​%. The amount of bad debts expense for 2019 is __________.

Answer 1

Answer:

$21,000

Explanation:

During the​ year, credit sales amounted to $ 840,000.

Cash collected on credit sales amounted to $ 790,000​, and $ 18,000 has been written off.

At the end of the​ year, the company adjusted for bad debts expense using the percent-of-sales method and applied a​ rate, based on past​ history, of 2.5%.

The amount of bad debts expense for 2019 is 2.5% x 840,000 = $21,000