Question

Oak Company uses the percentage-of-receivables method for recording bad debts expense. The accounts receivable balance is 90,000 at year-end. The total credit sales were 2,600,000 for the year. Management estimates that 4

Answer 1

Oak Company needs to estimate its bad debts expense using the percentage-of-receivables method. The calculation is based on the accounts receivable balance, which is $90,000, and requires a management estimate percentage of uncollectible accounts, which is missing in the query.

Step-by-step explanation:

The question pertains to the percentage-of-receivables method used for recording bad debts expense in accounting. Unfortunately, the student's question seems to be incomplete, as it ends with 'Management estimates that 4.' What we can deduct from the available information is that Oak Company will estimate its bad debts based on the ending accounts receivable balance, which is $90,000. We would need the percentage that management estimates as uncollectible to calculate the bad debts expense accurately.

If we assume the missing percentage to be 'X%', then the calculation for the bad debts expense using the percentage-of-receivables method would simply be $90,000 multiplied by X%, representing the estimated uncollectible amount within the accounts receivable. This result would then be recorded as a bad debts expense for the year.