Question

Uncollectible Account Expense (Bad Debt Expense) is estimated to be 2% of net credit sales. The Allowance for Uncollectible Accounts account has a credit balance of $2,000. The net credit sales for the year are $200,000. The balance of Accounts Receivable is $40,000. Using the Percentage of Net Sales method of determining uncollectibles, how much will be recorded as an Uncollectible Accounts Expense (Bad Debt Expense)? Group of answer choices $7,160 $3,200 $4,000 $40,000

Answer 1

$4,000

Step-by-step explanation:

$200,000*2%=$4,000

Bad Debt Expense Dr.$4,000

Account Receivable Cr.$4,000