Question

Abbott Company uses the allowance method of accounting for uncollectible accounts. Abbott estimates that 4% of credit sales will be uncollectible. On January 1, Allowance for Doubtful Accounts had a credit balance of $3,100. During the year, Abbott wrote off accounts receivable totaling $2,100 and made credit sales of $94,000. There were no sales returns during the year. After the adjusting entry, the December 31 balance in Bad Debt Expense will be

Answer 1

$3760

Step-by-step explanation:

Calculation to determine the December 31 balance in Bad Debt Expense

Using this formula

Bad debt expense = Credit sales × Uncollectible percentage

Let plug in the formula

Bad debt expense= $94,000 × 4%

Bad debt expense= $94,000 × 0.04

Bad debt expense= $3760

Therefore the December 31 balance in Bad Debt Expense will be $3760