Question

Flyer Company has provided the following information prior to any year-end bad debt adjustment: Cash sales, $161,000 Credit sales, $461,000 Selling and administrative expenses, $121,000 Sales returns and allowances, $41,000 Gross profit, $501,000 Accounts receivable, $215,000 Sales discounts, $25,000 Allowance for doubtful accounts credit balance, $2,300 Flyer prepares an aging of accounts receivable and the result shows that 4% of accounts receivable is estimated to be uncollectible. How much is bad debt expense

Answer 1

$4,140

Step-by-step explanation:

Given the above information, we will compute the bad debt expense as;

Bad debt expense

= (Cash sales × 4% of accounts receivables) - Credit balance in allowance for doubtful accounts

= ($161,000 × 4%) - Credit balance in allowance for doubtful accounts

= $6,440 - $2,300

= $4,140

Therefore, the bad debt expense is $4,140