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How do I find the amount of bad debts expense for this question?


The question asks:
Using the allowance method, compute the amount of bad debts expense for 2007.

The amounts given are:
Accts Rec. balance, Jan 1, 2007 $125,400
Allowance for doubtful accounts, Jan 1, 2007 $3,250
Sales on Account, 2007 $875,000
Cost of Goods Sold, 2007 $620,000
Collections of Accounts Rec., 2007 $910,000

It also states though, the company wrote off $2,800 of accounts that couldn't be collected. The company estimates that .5 percent of sales on account.

I am not necessarily asking for the answer, but how to do this? I feel the book is not clear, and I need real words to help me. Thanks!

538 day(s) ago

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Answers (1)

MelonsO 		Pull out all of the figures that are considered bad debts under the "allowance" method. My guess sales + collections (- accts rec if that is a debit acct, I can't remember, + if it is a credit account) - sales on acct - cost of goods - writeoff and then finally - allowance for doubtful accounts.

Add all the credit acct's, - all the debit accounts. It's all down to weather your method considers the allowance acct a credit or debit.

I wonder why it says there are no answers?

Posted 538 days ago

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