Flyer Company has provided the following Information prior to any year-end bad d

Question

Flyer Company has provided the following Information prior to any year-end bad debt adjustment Cash sales. $153,000 Credit sales, $453,000 Selling and administrative expenses, $113,000 Sales returns and allowances, $33,000 Gross profit, $493,000 Accounts receivable, $140,000 Sales discounts. $17,000 Allowance for doubtful accounts credit balance, $1,500 Flyer estimates bad debt expense assuming that 2.5% of credit sales have historically been uncollectible. What is the balance In the allowance for doubtful accounts after bad debt expense is recorded? $9,825 $12,825 13,650, $11,325

Explanation / Answer

Bad debt = 2.5% of 453,000 = 11,325

Balance in the allowance for doubtful acounts after bad debt expenses is $9,825 (11,325 - 1,500).

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