At the beginning of 2017,Elixir,Inc.has the following account balances: Accounts Receivable $\$ 40,000$ (debit balance)
Allowance for Bad Debts $\$ 5,000$ (credit balance) Bad Debts Expense $0
During the year,credit sales amounted to $850,000.Cash collected on credit sales amounted to $760,000,and $18,000 has been written off.At the end of the year,the company adjusted for bad debts expense using the percent-of-sales method and applied a rate,based on past history,of 2.5%.The ending balance in the Allowance for Bad Debts is ________.

Question

At the beginning of 2017,Elixir,Inc.has the following account balances: Accounts Receivable $\$ 40,000$ (debit balance)
 Allowance for Bad Debts $\$ 5,000$ (credit balance) Bad Debts Expense $0
During the year,credit sales amounted to $850,000.Cash collected on credit sales amounted to $760,000,and $18,000 has been written off.At the end of the year,the company adjusted for bad debts expense using the percent-of-sales method and applied a rate,based on past history,of 2.5%.The ending balance in the Allowance for Bad Debts is ________.

Quizplus · Accepted Answer

The bad debts expense for the year is 2.5% of $850,000, which is $21,250. The Allowance for Bad Debts account is adjusted by adding this expense and subtracting the $18,000 written off, resulting in an ending balance of $8,250.

At the Beginning of 2017,Elixir,Inc $40,000\$ 40,000$40,000 (Debit Balance) Allowance for Bad Debts

At the Beginning of 2017,Elixir,Inc $\$ 40,000$ (Debit Balance)
Allowance for Bad Debts