value: 1.87 points M8-7 Estimating Bad Debts Using the Percentage of Credit Sale

Question

value: 1.87 points M8-7 Estimating Bad Debts Using the Percentage of Credit Sales Method [LO 8-2] Assume Simple Co. had credit sales of $260,000 and cost of goods sold of $160,000 for the period. Simple uses the percentage of credit sales method and estimates that 1 percent of credit sales would result in uncollectible accounts. Before the end-of-period adjustment is made, the Allowance for Doubtful Accounts has a credit balance of $350. What amount of Bad Debt Expense would the company record as an end-of-period adjustment? Bad Debt Expense S 1,950

Explanation / Answer

Credit sales $ 260,000 Uncollectible percentage on credit sales 1% Baddebt expense for the year ($260,000*1%) $      2,600

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