A company using the percentage of sales method for estimating bad debts has sales of $350,000 and estimates that 1.0% of its sales are uncollectible. The unadjusted balance in Allowance for Doubtful Accounts is a $300 credit. The estimated amount of bad debts expense is $3,200

Question

Quizplus · Accepted Answer

The estimated amount of bad debts expense should be $3,500 (1.0% of $350,000), not $3,200.

A Company Using the Percentage of Sales Method for Estimating