Question

Assume that Simple Co. had credit sales of $248,000 and cost of goods sold of $148,000 for the period. Simple uses the aging method and estimates that the appropriate ending balance in the Allowance for Doubtful Accounts is $2, 800. Before the end-of-period adjustment is made, the Allowance for Doubtful Accounts has a credit balance of $230. What amount of Bad Debt Expense would the company record as an end-of-period adjustment?

Answer 1

Answer: $2,570

Explanation:

Simple estimates that the appropriate ending balance in the Allowance for Doubtful Accounts is $2,800.

This account has a credit balance of $230.

The amount of Bad Debt expense is the amount that will take it to a balance of $2,800:

= 2,800 - 230

= $2,570