On average,5% of credit sales has been uncollectible in the past.At the end of the year,the balance of accounts receivable is $100,000 and the allowance for doubtful accounts has an unadjusted credit balance of $500.Net credit sales during the year were $150,000.Using the percentage of credit sales method,the estimated bad debt expense would be:
A)$5,000.
B)$7,000.
C)$7,500.
D)$8,000

Question

Quizplus · Accepted Answer

The estimated bad debt expense using the percentage of credit sales method is calculated as follows:

Net credit sales x Percentage of uncollectible sales = Estimated bad debt expense

$150,000 x 5% = $7,500

Therefore, the estimated bad debt expense is $7,500, which is option C.

On Average,5% of Credit Sales Has Been Uncollectible in the Past.At