Question

Wesson Company uses the allowance method to record its expected credit losses. It estimates its losses at one percent of credit sales, which were $750,000 during the year. The Accounts Receivable balance was $220,000 and the Allowance for Doubtful Accounts has a credit balance of $1,000 at year-end. What amount is the debit to the Bad Debts Expense

Answer 1

Answer: $7,500

Step-by-step explanation:

The Bad Debt expense is the amount that might not be paid by the account receivables of a company.

It is calculated by the formula:

= Credit sales * Estimated losses

= 750,000 * 1%

= $7,500