Collision Corporation
Data for Collision Corporation for the year ended December 31, 2012, are presented below.
Credit Sales $~~~~~~$ $ \$ 2,000,000 $
Sales retuns and allowances $~~~~~~$ 40,000
Accounts receivable (December 31, 2012) $~~~~~~$ 610,000
Allowance for bad debts
$~~$(Before adjustment at December 31, 2012) $~~~~~~$ 15,000
Estimated amount of uncollected accounts based on aging analysis $~~~~~~$ 55,000
-Refer to the information provided for Collision Corporation. If Collision estimates its bad debts at 2% of net credit sales, what amount will be reported as bad debt expense for 2012?

Question

Collision Corporation 
Data for Collision Corporation for the year ended December 31, 2012, are presented below.
Credit Sales $~~~~~~$ $ \$ 2,000,000 $
Sales retuns and allowances $~~~~~~$ 40,000
Accounts receivable (December 31, 2012) $~~~~~~$ 610,000
Allowance for bad debts
$~~$(Before adjustment at December 31, 2012) $~~~~~~$ 15,000
Estimated amount of uncollected accounts based on aging analysis $~~~~~~$ 55,000 
-Refer to the information provided for Collision Corporation. If Collision estimates its bad debts at 2% of net credit sales, what amount will be reported as bad debt expense for 2012?

Quizplus · Accepted Answer

Net credit sales are $1,960,000 ($2,000,000 - $40,000). 2% of net credit sales is $39,200, which is the bad debt expense reported for 2012.

Collision Corporation Data for Collision Corporation for the Year ~~~~~~

Collision Corporation
Data for Collision Corporation for the Year $~~~~~~$