The current debit balance in allowance for doubtful accounts is $150. Management estimates that 2% of net credit sales of $100,000 will be uncollectible. Based on the foregoing data, what is the bad-debt expense balance on the income statement?
A)$2,150
B)$1,850
C)$3,150
D)$2,000

Question

Quizplus · Accepted Answer

The bad-debt expense is calculated as 2% of net credit sales, which is $100,000. Therefore, the bad-debt expense is 2% of $100,000, equaling $2,000. The current debit balance in the allowance for doubtful accounts does not affect the calculation of bad-debt expense for the income statement.

The Current Debit Balance in Allowance for Doubtful Accounts Is