Flyer Company has provided the following information prior to any year-end bad debt adjustment: • Cash sales,$150,000
• Credit sales,$450,000
• Selling and administrative expenses,$110,000
• Sales returns and allowances,$30,000
• Gross profit,$490,000
• Accounts receivable,$110,000
• Sales discounts,$14,000
• Allowance for doubtful accounts credit balance,$1,200
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Flyer prepares an aging of accounts receivable and the result shows that 5% of accounts receivable is estimated to be uncollectible.What is the balance in the allowance for doubtful accounts after bad debt expense is recorded?
A)$5,500.
B)$6,700.
C)$4,240.
D)$4,300.

Question

Quizplus · Accepted Answer

The estimated uncollectible amount is 5% of accounts receivable, which is $110,000 * 5% = $5,500. The existing credit balance in the allowance for doubtful accounts is $1,200. Therefore, the balance after recording bad debt expense is $5,500.

Flyer Company Has Provided the Following Information Prior to Any