**TB MC Qu. 6-46 (Algo) Superior Company has provided you with...** Superior Company has provided you with the following information before any year-end adjustments: - Net credit sales are $130,250. - Historical percentage of credit losses is 4%. - Allowance for doubtful accounts has a credit balance of $500. - Accounts receivables ending balance is $46,500. **Question:** What is the estimated bad debt expense using the percentage of credit sales method? **Options:** - $5,210 - $1,860 **Answer Explanation:** To estimate the bad debt expense using the percentage of credit sales method, calculate 4% of the net credit sales. Bad debt expense = 4% of $130,250 = $5,210 Thus, the correct estimation for the bad debt expense is **$5,210**.
**TB MC Qu. 6-46 (Algo) Superior Company has provided you with...** Superior Company has provided you with the following information before any year-end adjustments: - Net credit sales are $130,250. - Historical percentage of credit losses is 4%. - Allowance for doubtful accounts has a credit balance of $500. - Accounts receivables ending balance is $46,500. **Question:** What is the estimated bad debt expense using the percentage of credit sales method? **Options:** - $5,210 - $1,860 **Answer Explanation:** To estimate the bad debt expense using the percentage of credit sales method, calculate 4% of the net credit sales. Bad debt expense = 4% of $130,250 = $5,210 Thus, the correct estimation for the bad debt expense is **$5,210**.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:**TB MC Qu. 6-46 (Algo) Superior Company has provided you with...**
Superior Company has provided you with the following information before any year-end adjustments:
- Net credit sales are $130,250.
- Historical percentage of credit losses is 4%.
- Allowance for doubtful accounts has a credit balance of $500.
- Accounts receivables ending balance is $46,500.
**Question:**
What is the estimated bad debt expense using the percentage of credit sales method?
**Options:**
- $5,210
- $1,860
**Answer Explanation:**
To estimate the bad debt expense using the percentage of credit sales method, calculate 4% of the net credit sales.
Bad debt expense = 4% of $130,250 = $5,210
Thus, the correct estimation for the bad debt expense is **$5,210**.
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