Rexbilt Company estimates its credit losses at 2% of credit sales, which were $600,000 this year. At December 31 of this year, the Accounts Receivable balance is $90,000, and the Allowance for Doubtful Accounts has a $1,200 balance before adjustment.
Required:
a. What amount of bad debt expense will Rexbilt report for this year.
b. What net amount of accounts receivable would appear on the December 31 balance sheet this year?
c. Assume that Rexbilt Company uses aged accounts receivable as a basis of estimating credit losses, instead of a percent of credit sales. If the firm estimates that $7,600 of the accounts will prove uncollectible, what amount of bad debt expense will Rexbilt report for this year?

Question

Rexbilt Company estimates its credit losses at 2% of credit sales, which were $600,000 this year. At December 31 of this year, the Accounts Receivable balance is $90,000, and the Allowance for Doubtful Accounts has a $1,200 balance before adjustment. 
Required:
a. What amount of bad debt expense will Rexbilt report for this year.
b. What net amount of accounts receivable would appear on the December 31 balance sheet this year?
c. Assume that Rexbilt Company uses aged accounts receivable as a basis of estimating credit losses, instead of a percent of credit sales. If the firm estimates that $7,600 of the accounts will prove uncollectible, what amount of bad debt expense will Rexbilt report for this year?

Quizplus · Accepted Answer

The Answer of Rexbilt Company estimates its credit losses at 2% of credit sales, which were $600,000 this year. At December 31 of this year, the Accounts Receivable balance is $90,000, and the Allowance for Doubtful Accounts has a $1,200 balance before adjustment. 
Required:
a. What amount of bad debt expense will Rexbilt report for this year.
b. What net amount of accounts receivable would appear on the December 31 balance sheet this year?
c. Assume that Rexbilt Company uses aged accounts receivable as a basis of estimating credit losses, instead of a percent of credit sales. If the firm estimates that $7,600 of the accounts will prove uncollectible, what amount of bad debt expense will Rexbilt report for this year?

Rexbilt Company Estimates Its Credit Losses at 2% of Credit