Flyer Company has provided the following information:
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
Flyer estimates bad debt expense assuming 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?

Question

Flyer Company has provided the following information:
 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
Flyer estimates bad debt expense assuming 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?

Quizplus · Accepted Answer

The allowance for doubtful accounts balance ($5,500) equals 5% of accounts of accounts receivable (5% * $110,000).

Flyer Company Has Provided the Following Information