Flyer estimates bad debt expense assuming that 1% of credit sales have historica

Question

Flyer estimates bad debt expense assuming that 1% of credit sales have historically been uncollectible. How much is Flyer’s bad debt expense?

A. $7,680

B. $3,360

C. $4,680

D. $1,680

Flyer Company has provided the following information prior to any year-end bad debt adjustment:    • Cash sales, $168,000 • Credit sales, $468,000 • Selling and administrative expenses, $128,000 • Sales returns and allowances, $48,000 • Gross profit, $508,000 • Accounts receivable, $285,000 • Sales discounts, $32,000 • Allowance for doubtful accounts credit balance, $3,000

Flyer estimates bad debt expense assuming that 1% of credit sales have historically been uncollectible. How much is Flyer’s bad debt expense?

Explanation / Answer

Answer is option (D) $1680

Bad debts = $468000 x 1 /100 = $4680

$4680 - $3000 (Allowance for doubtful accounts credit balance) = $1680

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---