Flyer Company has provided the following information prior to any year-end bad d
ID: 2488819 • Letter: F
Question
Flyer Company has provided the following information prior to any year-end bad debt adjustment:
• Cash sales, $156,000
• Credit sales, $456,000
• Selling and administrative expenses, $116,000
• Sales returns and allowances, $36,000
• Gross profit, $496,000
• Accounts receivable, $165,000
• Sales discounts, $20,000
• Allowance for doubtful accounts credit balance, $1,800
Flyer prepares an aging of accounts receivable and the result shows that 4% of accounts receivable is estimated to be uncollectible. How much is bad debt expense?
A. $8,400
B. $4,800
C. $4,728
D. $6,600
Explanation / Answer
B. $ 4,800
Accounts Receivable = 165000 Estimation of non collection 4% Bad debts 6600 Less: Credit balance of allownces for doubtful debts 1,800 Bad debt expense to be recognised 4,800