2) The Henry Company lists the following accounts on its ye ar-end trial balance

Question

2) The Henry Company lists the following accounts on its ye ar-end trial balance: Debit Credit Accounts receivable Allowance for uncollectible accounts Sales Sales returns and allowances 186,000 1,340 594,000 33,400 The allowance for uncollectible accounts is estimated, at year end, at 5.5% of outstanding accounts receivable. (a) REQUIRED: Determine the bad debt expense reported on the year-end income statement. Assume the Henry Company estimates its uncollectible accounts at REQUIRED: 2.5% of net sales. Determine the bad debt expense reported on the year-end income statement. (b)

Explanation / Answer

a) 5.5% of Outstanding A/R A. Outstanding A/R 186000 B. 5.5% Estimated Uncollectibel accounts (186000*5.5%) 10230 C. Balance in Allowance for uncollectible account 1340 D. Bad debt Expense to be reported (B-C) 8890 b) 2.5% of Net Sales A. Sales 594000 B. Sales Returns and Allowances 33400 C. Net Sales (A-B) 560600 D. Estimate of uncollectible accounts at 2.5% (C*2.5%) 14015

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