Your company uses the percentage of credit sales method for calculating bad debt expense.If your company has $216,000 in total sales,of which $178,000 are on credit,and its historical bad debt loss is 6% of credit sales,bad debt expense is:
A)$12,960.
B)$10,680.
C)$38,000.
D)$11,000

Question

Quizplus · Accepted Answer

- First, we need to calculate the expected credit losses based on the historical bad debt loss rate of 6%: 
$178,000 (credit sales) x 0.06 (bad debt loss rate) = $10,680 
- This means that the company expects $10,680 in bad debt expenses for the period.

Your Company Uses the Percentage of Credit Sales Method for Calculating