Question

The Allowance for Bad Debts account has a credit balance of $2,000 before the adjusting entry for bad debts expense. The company's management estimates that 4% of net credit sales will be uncollectible for the year 2019. Net credit sales for the year amounted to $250,000. What is the amount of Bad Debts Expense reported on the income statement for 2019?

Answer 1

$10,000

Step-by-step explanation:

Net Credit Sales $250,000

Allowance for Doubtful Accounts $250,000*4%=$10,000

Bad Debt Expense will be $10,000

Bad Debt Expense Dr.$10,000

Allowance for Uncollectible Cr.$10,000