DEF Company has estimated bad debts using the percentage of sales method since their business began operations in 20x1. Information relating to bad debts and sales is as follows: Estimated bad debtYearSalesActual bad debtsexpense20x187,0002,6101,20020x2132,0003,9602,8503,22220x3147,0004,410At the beginning of 20x4, DEF proposes changing their estimation of bad debts expense from 3% of sales to2%. Sales for the year total P163,000 and actual bad debts amounted to P3,720.Determine the balance in “Allowance for bad debts on December 31, 20x4.

Estimated bad debt expense for 20x4 = Sales x 2% = 163000*2% = P3,260

Estimated bad debt Year Sales Actual bad debts expense 20x1 87,000 2,610 3,960 1,200 2,850 3,222 20x2 132,000 20x3 147,000 4,410 At the beginning of 20x4, DEF proposes changing their estimation of bad debts expense from 3% of sales to 2%. Sales for the year total P163,000 and actual bad debts amounted to P3,720. Determine the balance in “Allowance for bad debts on December 31, 20x4.

Estimated bad debt Year Sales Actual bad debts expense 20x1 87,000 2,610 3,960 1,200 2,850 3,222 20x2 132,000 20x3 147,000 4,410 At the beginning of 20x4, DEF proposes changing their estimation of bad debts expense from 3% of sales to 2%. Sales for the year total P163,000 and actual bad debts amounted to P3,720. Determine the balance in “Allowance for bad debts on December 31, 20x4.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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