Abbott Company uses the allowance method of accounting for uncollectible accounts. Abbott estimates that 3% of credit sales will be uncollectible. On January 1, the Allowance for Doubtful Accounts had a credit balance of $2,400. During the year, Abbott wrote off accounts receivable totaling $1,800 and made credit sales of $100,000. After the adjusting entry, the December 31 balance in Bad Debt Expense will be
A) $1,200
B) $3,000
C) $3,600
D) $7,200

Question

Quizplus · Accepted Answer

Bad Debt Expense = Credit Sales × Bad Debt as a Percent of Credit Sales = $100,000 × 0.03 = $3,000

Abbott Company Uses the Allowance Method of Accounting for Uncollectible