Question

1. If Yak uses the percent of sales method, Bad Debt Expense on the October 2020 Income Statement will be:

Answer 1

Answer:

1. $19,000

2. $16,000

3. $30,200

Explanation:

Complete question "The Accounts Receivable balance for Yak Corporation is $82,000 at October 31, 2020. Before calculating and recording October 2020 bad debt expense, the Allowance for Doubtful Accounts has a debit balance of $3,000. Sales for the month are $950,000. An aging of accounts receivable results in a $17,200 estimate for the Allowance for Doubtful Accounts as of October 31, 2020. In the past several years, 2% of sales have proven uncollectible.    

1. If Yak uses the percent of sales method, Bad Debt Expense on the October 2020 Income Statement will be?

2. If Yak uses the percent of sales method, the Allowance for Doubtful Accounts reflected on the October 31, 2020 Balance Sheet will be?

3. If Yak uses the analysis of receivables method, Bad Debt Expense on the October 2020 Income Statement will be:

1. Bad debt expenses = Sales * 2% of sales have proven uncollectible

Bad debt expenses = $950,000 * 2%

Bad debt expenses = $19,000

2. Allowance for doubtful account balance = Bad debt - Beginning Debit balance

Allowance for doubtful account balance = $19,000 - $3,000

Allowance for doubtful account balance = $16,000

3. Bad debt expenses = Ending Doubtful Accounts balance - Beginning debit balance

Bad debt expenses = $17,200 + $3,000

Bad debt expenses = $30,200