The Allowance for Bad Debts account has a credit balance of $2,000 before the adjusting entry for bad debts expense. The company's management estimates that 4% of net credit sales will be uncollectible for the year 2019. Net credit sales for the year amounted to $250,000. What is the amount of Bad Debts Expense reported on the income statement for 2019?

Question

Quizplus · Accepted Answer

The Bad Debts Expense is calculated as 4% of net credit sales, which is $250,000. Therefore, Bad Debts Expense = 0.04 * $250,000 = $10,000.

The Allowance for Bad Debts Account Has a Credit Balance