Question

Charles company used the percent of sales method to determine its bad debts expense. At the end of the current year, the company's unadjusted trial balance reported the following selected amounts: Accounts Receivable $245,000 debit Allowance for doubtful Accounts $300 credit Net Credit Sales $900,000 Based on past experience, the company estimates 0.5% of credit sales to be uncollectible. What amount would be reported in the Balance Sheet under Accounts Receivable, net of doubtful accounts

Answer 1

Answer:

$240,200

Explanation:

The computation of the account receivable amount reported in the balance sheet is given below:

Bad debt expense os

= $900000 × .50%

= $4,500

And,

Allowance for doubtful accounts after adjustment is

= $4,500 + $300

= $4,800

Now

Balance of account receivable is

= $245,000 - $4,800

= $240,200