Sahil Inc. reported credit sales of $600,000 and cash collections of $450,000 for last year. The ending balance in accounts receivable was $800,000. Bad debt expense is estimated at 1% of credit sales. The allowance for doubtful accounts had a balance of $80,000 at the beginning of the year. What was the bad debt expense for the year?

Question

Quizplus · Accepted Answer

The bad debt expense is calculated as 1% of credit sales. Given that credit sales are $600,000, the bad debt expense for the year is 1% of $600,000, which equals $6,000.

Sahil Inc Reported Credit Sales of $600,000 and Cash Collections of of $450,000