Answer:
$15,000
Step-by-step explanation:
When we are estimating bad debts as a percentage of credit sales then bad debt expense to be recognised each year is calculated by the formula
Total Credit Sales x Percentage of bad debts
As per data given in the question the Total Credit Sales = $500,000 and Percentage of bad debts is 3%.
Therefore Bad debt expenses to be recognised for the year by Saint John Industries would be
$500,000 x 3%
$15,000.
The Journal Entry to record the above transaction is
Bad Debt Expense $15,000
Allowance for Doubtful Accounts $15,000