Question

Wasco Company 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 $120,000 and the Allowance for Doubtful Accounts has an unadjusted credit balance of $1,500. Net credit sales during the year were $190,000. Using the percentage of credit sales method, what is the estimated Bad Debt Expense for the year

Answer 1

$9,500

Step-by-step explanation:

Using the Percentage-of-sales approach (also known as the income statement approach, states that the sum of total bad debt expense to be identified and acknowledged by a company is to be calculated as a percentage of credit sales generated at that current accounting period.) Estimated Bad Debt Expense = Net credit sales X 5%

= $190,000 X 5%

= $9,500

Answer 2

$9,500

Step-by-step explanation:

Using the percentage of credit sales method, Estimated Bad Debt Expense = Net credit sales * 5%

= $190,000 * 5%

= $9,500