Wasco Company has experienced bad debt losses of 5% of credit sales in prior periods.At the end of the year,the balance of Accounts Receivable is $100,000 and the Allowance for Doubtful Accounts has an unadjusted credit balance of $500.Net credit sales during the year were $150,000.Using the percentage of credit sales method,what is the estimated Bad Debt Expense for the year?

Question

Quizplus · Accepted Answer

The estimated bad debt expense for the year can be calculated as follows:

Bad Debt Expense = Net Credit Sales x Percentage of Bad Debt Losses

Percentage of Bad Debt Losses = 5%

Net Credit Sales = $150,000

Bad Debt Expense = $150,000 x 5% = $7,500

Therefore, the estimated bad debt expense for the year is $7,500. The best choice is C.

Wasco Company Has Experienced Bad Debt Losses of 5% of Credit