ABC Company uses the percent-of-sales method for estimating bad debts expense. The company's bad debt expense is normally 2% of net credit sales which were $380,000 for the year. During the year $1,600 was written off. If the Allowance for Bad Debts account had a beginning credit balance of $3,700, what is the balance at the end of the year? A) $7,600 B) $8,700 C) $7,700 D) $9,700
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.
2
2. ABC Company uses the percent-of-sales method for estimating
company's bad debt expense is normally 2% of net credit sales which were $380,000 for the
year. During the year $1,600 was written off. If the Allowance for Bad Debts account had a
beginning credit balance of $3,700, what is the balance at the end of the year?
A) $7,600
B) $8,700
C) $7,700
D) $9,700
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
