A company had credit sales of $5.0 million for the year and estimates their bad debts to be 1% of net credit sales. Accounts receivable has a $450,000 balance and the allowance for doubtful accounts has a credit balance of $3,000 prior to adi stment. What will be the ending balance in the allowance for doubtful accounts after the adjusting entry recording bad debts expense is recorded when the net credit sales method was used? O $50,000. O $47,000. O $53,000. O $48,000.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
![A company had credit sales of $5.0 million for the year
and estimates their bad debts to be 1% of net credit
sales. Accounts receivable has a $450,000 balance and
the allowance for doubtful accounts has a credit balance
of $3,000 prior to adi stment. What will be the ending
balance in the allowance for doubtful accounts after the
adjusting entry recording bad debts expense is recorded
when the net credit sales method was used?
O $50,000.
$47,000.
$53,000.
O $48,000.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa0e66dc0-33a7-486a-ab2a-7a4deeb92994%2F62f58349-0ea6-453c-8545-22bb58c929a5%2Fpchola_processed.jpeg&w=3840&q=75)
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