The following information is from the 2020 records of R & S Commercial Plumbing Company: $$\begin{array} { | l | r | }
\hline \begin{array} { l }
\text { Accounts receivable, December } 31,2020 \
\text { Allowance for Bad Debts, December 31,2020 } \
\text { prior to adjustment }
\end{array} & \$ 45,000 \text { (debit) } \
\hline \text { Net credit sales for 2020 } & 1,300 \text { (debit) } \
\hline \begin{array} { l }
\text { Accounts written off as uncollectible during } \
2017
\end{array} & 14,000 \
\hline \text { Cash sales during 2020 } & 26,000 \
\hline
\end{array}$$ Bad debts expense is estimated by the percent-of-sales method. Management estimates that 3% of net credit sales will be uncollectible. Calculate the amount of bad debts expense for 2020.

Question

The following information is from the 2020 records of R & S Commercial Plumbing Company: $$\begin{array} { | l | r | } 
\hline \begin{array} { l } 
\text { Accounts receivable, December } 31,2020 \
\text { Allowance for Bad Debts, December 31,2020 } \
\text { prior to adjustment }
\end{array} & \$ 45,000 \text { (debit) } \
\hline \text { Net credit sales for 2020 } & 1,300 \text { (debit) } \
\hline \begin{array} { l } 
\text { Accounts written off as uncollectible during } \
2017
\end{array} & 14,000 \
\hline \text { Cash sales during 2020 } & 26,000 \
\hline
\end{array}$$ Bad debts expense is estimated by the percent-of-sales method. Management estimates that 3% of net credit sales will be uncollectible. Calculate the amount of bad debts expense for 2020.

Quizplus · Accepted Answer

Bad debts expense = Net credit sales * Estimated uncollectible percentage= $1,300,000 * 3%= $39,000

The Following Information Is from the 2020 Records of R