The following information pertains to Lindsey Corp.at the end of the year: Lindsey Corp.uses the percentage-of-credit-sales method and estimates that 2% of the credit sales are uncollectible.After the year-end adjustment,what amount of bad debt expense would Lindsey report for the year?
$$\begin{array} { | l r | r | }
\hline \text { Credit Sales } & \$ 150,000 & \
\hline \text { Accounts Payable } & 20,000 & \
\hline \text { Accounts Receivable } & 30,000 & \
\hline \text { Allowance for Uncollectible } & 800 & \text { debit } \
\text { Accounts } & & \
\hline \text { Cash Sales } & 5,500 & \
\hline
\end{array}$$

Question

The following information pertains to Lindsey Corp.at the end of the year: Lindsey Corp.uses the percentage-of-credit-sales method and estimates that 2% of the credit sales are uncollectible.After the year-end adjustment,what amount of bad debt expense would Lindsey report for the year?
$$\begin{array} { | l r | r | } 
\hline \text { Credit Sales } & \$ 150,000 & \
\hline \text { Accounts Payable } & 20,000 & \
\hline \text { Accounts Receivable } & 30,000 & \
\hline \text { Allowance for Uncollectible } & 800 & \text { debit } \
\text { Accounts } & & \
\hline \text { Cash Sales } & 5,500 & \
\hline
\end{array}$$

Quizplus · Accepted Answer

The bad debt expense is calculated as 2% of the credit sales. Credit sales are $150,000, so the bad debt expense is $150,000 * 2% = $3,000.

The Following Information Pertains to Lindsey Corp A)$1,200 B)$2,200

The Following Information Pertains to Lindsey Corp A)$1,200
B)$2,200