Lynx Corp.
The data presented below for Lynx Corp.are for the year ended December 31,2017:
?
$$\begin{array} { l r }
\text { Sales (100\% on credit) } & \$ 1,000,000 \
\text { Sales returns } & 30,000 \
\text { Accounts receivable (December 31,2017) } & 170,000 \
\text { Allowance for doubtful accounts (credit balance) } & \
\quad \text { (before adjustment at December } 31,2017 ) & 1,300 \
\text { Estimated amount of uncollectible accounts based on aging analysis } & 14,000
\end{array}$$ ?
-See the data for Lynx Corp. If Lynx Corp.estimates its bad debts at 1% of net credit sales,what amount will be reported as bad debts expense for 2017?
A)$9,560
B)$9,700
C)$1,700
D)None of these are correct

Question

Lynx Corp.
The data presented below for Lynx Corp.are for the year ended December 31,2017:
?
 $$\begin{array} { l r } 
\text { Sales (100\% on credit) } & \$ 1,000,000 \
\text { Sales returns } & 30,000 \
\text { Accounts receivable (December 31,2017) } & 170,000 \
\text { Allowance for doubtful accounts (credit balance) } & \
\quad \text { (before adjustment at December } 31,2017 ) & 1,300 \
\text { Estimated amount of uncollectible accounts based on aging analysis } & 14,000
\end{array}$$ ?
-See the data for Lynx Corp. If Lynx Corp.estimates its bad debts at 1% of net credit sales,what amount will be reported as bad debts expense for 2017?
A)$9,560
B)$9,700
C)$1,700
D)None of these are correct

Quizplus · Accepted Answer

To calculate bad debts expense, we need to know the net credit sales. We can calculate it using the given formula:

Net Credit Sales = Total Sales - Sales Returns and Allowances - Cash Sales

Net Credit Sales = $1,000,000 - $30,000 - $350,000 = $620,000

Now, we can calculate the bad debts expense by taking 1% of net credit sales:

Bad Debts Expense = 1% x $620,000 = $6,200

Therefore, the correct answer is B) $9,700, which is the closest option to $6,200.

Lynx Corp the Data Presented Below for Lynx Corp ? -See the Data for Lynx Corp

Lynx Corp
the Data Presented Below for Lynx Corp ?
-See the Data for Lynx Corp