Question

Assume that Metlock Company estimates its bad debt expense based on 6% of accounts receivable. What amount of bad debt expense will Metlock record if it has an Allowance for Doubtful Accounts credit balance of $4,000

Answer 1

Amount of bad debt expense = $47,540

Step-by-step explanation:

Missing:

Accounts receivable = 859,000

Bad debt expense = 6% on Accounts receivable

Doubtful Accounts credit balance = $4,000

Find:

Amount of bad debt expense

Computation:

Amount of bad debt expense = [859,000 x 0.06] - 4,000

Amount of bad debt expense = [859,000 x 0.06] - 4,000

Amount of bad debt expense = [51,540] - 4,000

Amount of bad debt expense = $47,540