MelonsO
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The balance for Allowance for Doubtful Accounts is calculated by taking 2% of net sales. The bad debt expense is the amount needed to adjust the current balance to that calculated amount. With the data you've been given, you need to calculate net credit sales, then multiply that amount by 2% to calculate the ending allowance required, then compare that to the current balance to get the bad debt expense.
Net credit sales = 950,000 sales - 21,000 returns = 929,000
Allowance required = 929,000 net sales x 2% = 18,580
Bad debt expense = 18,5800 req'd balance - 1,000 current = 17,580
So bad debt expense is 17,580
 Posted 538 days ago
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