Question

Weyawega Company reported credit sales of $985,750 during 20X1. On December 31, 20X1, the company had gross accounts receivable of $450,000 and an $18,000 balance in the Allowance for Uncollectible Accounts. The company esitmated Bad Debt Expense at 2% of credit sales. Based on this data, determine the Bad Debt Expense that the company should report on the 20X1 income statement.

Answer 1

Answer:

Explanation:

The computation of the bad debt expense is shown below:

= (Credit sales × estimated percentage given ) - (credit balance of Allowance for Uncollectible Accounts)

= ($985,750 × 2%) -  ($18,000)

= $19,715 - $18,000

= $1,715

= (Credit sales × estimated percentage given ) + (debit balance of Allowance for Uncollectible Accounts)

= ($985,750 × 2%) -  ($18,000)

= $19,715 + $18,000

= $37,715

Since in the question it does not specify that Uncollectible Accounts has debit or credit balance so we computed in the both methods