1. D&G Audio, Inc. sold $3,000,000 worth of products in 2015 on credit. It estim

Question

1. D&G Audio, Inc. sold $3,000,000 worth of products in 2015 on credit. It estimated that 2% of those sales would prove to be uncollectible. Throughout the year, D&G wrote off $35,000 of A/R and collected $750,000. At the end of the year, it’s aging report showed that ending receivables (i.e., expected collections) should be $170,000. a. Using the Percentage of Sales Method, calculate the bad debt expense for 2015. b. Using the Aging of Receivables Method, calculate the bad debt expense for 2015.

Explanation / Answer

a bad debt expense under percentage of sales method (2%*3000000) 60000 b bad debt expense under aging of receivables method is equal to expected collections = 170000

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