Brighton Company uses the allowance method to estimate losses from uncollectable

Question

Brighton Company uses the allowance method to estimate losses from uncollectable accounts.  Net sales for the year are $960,000 and the company estimates its bad debts as 1 percent of net sales.  If there is already a $4,800 credit balance in allowance for bad debts, how much should be recorded as bad debt expense?

Company uses the allowance method to estimate losses from uncollectable accounts. Net sales for the year are $960,000 and the company estimates its bad debts as 1 percent of net sales. If there is already a $4,800 credit balance in allowance for bad debts, how much should be recorded as bad debt expense?

Explanation / Answer

bad debt expense = 4800 - (960000 * 0.01) = 4800

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