Over the past five years,a company had average annual credit sales of $320,000 and an average annual net write-offs of $2,000.Credit sales in the current year are $300,000.Using the percentage of credit sales method,what should the company record as an estimate of bad debt expense?

Question

Quizplus · Accepted Answer

Estimated average uncollectible% = $2,000/$320,000 = .00625
Bad Debt Expense = estimated uncollectible% * Credit Sales
= 0.00625 * $300,000 = $1,875.

Over the Past Five Years,a Company Had Average Annual Credit