On average,5% of credit sales has been uncollectible in the past.At the end of the year,the balance of accounts receivable is $100,000 and the allowance for doubtful accounts has a credit balance of $500.Net credit sales during the year were $150,000.Using the percentage of credit sales method,the estimated bad debt expense would be:

Question

Quizplus · Accepted Answer

The estimated bad debt expense using the percentage of credit sales method can be calculated as follows:
Bad debt expense = Net credit sales x percentage of uncollectible credit sales
Percentage of uncollectible credit sales = 5%
Net credit sales = $150,000
Bad debt expense = $150,000 x 5% = $7,500
Therefore, the estimated bad debt expense using the percentage of credit sales method is $7,500. Choice C is the correct answer.

On Average,5% of Credit Sales Has Been Uncollectible in the Past.At