Question

Niagara Art is a new business. During its first year of​ operations, credit sales were​ $44,000 and collections of credit sales were​ $33,000. One​ account, $625, was written off. Management uses the​ percent-of-sales method to account for bad debts expense and estimates​ 2% of credit sales to be uncollectible. Bad debts expense for the first year of operations is​ ________.

Answer 1

$660

Step-by-step explanation:

The computation of the bad debt expense for the year is shown below:

= Credit sales × estimated percentage

= $33,000 × 2%

= $660

By multiplying the credit sales with the estimated percentage we can get the bad debt expense and the same is shown above

And, the other items values are ignored

Hence, the bad debt expense is $660