Question

Brownsville Novelty Store prepared the following budget information for the month of May: Sales are budgeted at $360,000. All sales are on account and a provision for bad debts is made for each month at three percent of sales for the month. Inventory was $84,000 on April 30; an inventory increase of $12,000 is planned for May 31. All inventory is marked to sell at cost plus 50 percent. Estimated cash disbursements for selling and administrative expenses for the month are $48,000. Depreciation for May is projected at $6,000. Brownsville's budgeted bad debts expense for May is:

Answer 1

Answer: $10800

Step-by-step explanation:

Brownsville's budgeted bad debts expense for May will be calculated by multiplying the sales budgeted for May by the percentage allocated to the provision for bad debt. This will be:

= $360,000 × 3%

= $360,000 × 3/100

= $360,000 × 0.03

= $10800

Brownsville's budgeted bad debts expense for May is $10800