Question

Finish Co. uses the allowance method based on the percent of sales method to account for bad debts. At the end of 2010, Finish Co.'s unadjusted trial balance shows an accounts receivable balance of $30,000; allowance for doubtful accounts balance of $200 (credit); and sales of $600,000. Based on history, Finish estimates that bad debts will be 1% of sales. The entry to record estimated bad debts will include a debit to Bad Debts Expense in the amount of: Multiple choice question. $500 $6,000 $6,200 $100 $5,800

Answer 1

Answer:

$6,000

Explanation:

Calculation to determine what The entry to record estimated bad debts will include

Bad Debts Expense=Sales of $600,000*1% of sales

Bad Debts Expense=$6,000

Therefore The entry to record estimated bad debts will include a debit to Bad Debts Expense in the amount of:$6,000