Question

Johnson Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense is established as a percentage of credit sales. For 2018, net credit sales totaled $6,300,000, and the estimated bad debt percentage is 1.30%. The allowance for uncollectible accounts had a credit balance of $60,000 at the beginning of 2018 and $49,000, after adjusting entries, at the end of 2018. Required: 1. What is bad debt expense for 2018 as a percent of net credit sales

Answer 1

See below

Step-by-step explanation:

For 2018, the net credit sales is totalled $6,300,000

Then, the estimated bad debt percentage is 1.30% of $6,300,000

= 1.30% × $6,300,000

= $81,900

Therefore, the bad debt expense for 2018 as a percentage of net credit sales is $81,900