Question

Libre, Inc. has experienced bad debt losses of 5% of credit sales in prior periods. At the end of the year, the balance of Accounts Receivable is $110,000 and the Allowance for Doubtful Accounts has an unadjusted credit balance of $1,000. Net credit sales during the year were $170,000. Using the percentage of credit sales method, what is the estimated Bad Debt Expense for the year

Answer 1

$8,500

Step-by-step explanation:

Given that;

Net credit sales during the year = $170,000

Estimated percentage of bad debt = 5%

The solution of estimated bad debt expense for the year is seen below;

Estimated bad debt expense for the year

= Net credit sales during the year × Estimated percentage of bad debt

= $170,000 × 5%

= $8,500