The data presented below for Lynx Corp.is for the year ended December 31, 2016: $$\begin{array} { l r }
\text { Sales (100\% on credit) } & \$ 1,000,000 \
\text { Sales returns } & 30,000 \
\text { Accounts Receivable (December 31,2016) } & 170,000 \
\text { Allowance for Doubtful Accounts [Cr. B alance] } & \
\quad \text { (Before adjustment at December 31, 2016) } & 1,300 \
\text { Estimated amount of uncollectible accounts based on aging analysis } & 14,000
\end{array}$$
-See the data for Lynx Corp. If Lynx Corp.estimates its bad debts at 1% of net credit sales, what amount will be reported as bad debt expense for 2016?
A) $9,560
B) $9,700
C) $1,700
D) None of these choices

Question

The data presented below for Lynx Corp.is for the year ended December 31, 2016: $$\begin{array} { l r } 
\text { Sales (100\% on credit) } & \$ 1,000,000 \
\text { Sales returns } & 30,000 \
\text { Accounts Receivable (December 31,2016) } & 170,000 \
\text { Allowance for Doubtful Accounts [Cr. B alance] } & \
\quad \text { (Before adjustment at December 31, 2016) } & 1,300 \
\text { Estimated amount of uncollectible accounts based on aging analysis } & 14,000
\end{array}$$
-See the data for Lynx Corp. If Lynx Corp.estimates its bad debts at 1% of net credit sales, what amount will be reported as bad debt expense for 2016?
A) $9,560
B) $9,700
C) $1,700
D) None of these choices

Quizplus · Accepted Answer

Net credit sales are $970,000 ($1,000,000 - $30,000). 1% of $970,000 is $9,700, which is the bad debt expense.

The Data Presented Below for Lynx Corp -See the Data for Lynx Corp