Question

Sheffield Corp. has outstanding accounts receivable totaling $6.46 million as of December 31 and sales on credit during the year of $23.2 million. There is also a credit balance of $13000 in the allowance for doubtful accounts. If the company estimates that 6% of its outstanding receivables will be uncollectible, what will be the amount of bad debt expense recognized for the year?

Answer 1

bad debt expense for the year ended 374,600 dollars

Step-by-step explanation:

6% of the accounts receivables are uncollectible.

year-end accounts receivables: 6,460,000

estimated bad debt expese of 6% = 387,600 credit

current allowance balance 13,000 credit

year-end adjustment for allowance: 374,600