The following information is from the 2020 records of R & S Commercial Plumbing Company: $$\begin{array} { | l | l | }
\hline \text { Accounts receivable, December 31, 2020 } & \$ 43,000 \text { (debit) } \
\hline \text { Allowance for Bad Debts, December 31,2020 prior to adjustment } & 1500 \text { (debit) } \
\hline \text { Net credit sales for 2020 } & 180,000 \
\hline \text { Accounts written off as uncollectible during 2017 } & 16,000 \
\hline \text { Cash sales during 2020 } & 26,000 \
\hline
\end{array}$$ Bad debts expense is estimated by the percent-of-sales method.Management estimates that 6% of net credit sales will be uncollectible.Calculate the amount of bad debts expense for 2020.
A) $10,800
B) $8220
C) $12,360
D) $9300

Question

The following information is from the 2020 records of R & S Commercial Plumbing Company: $$\begin{array} { | l | l | } 
\hline \text { Accounts receivable, December 31, 2020 } & \$ 43,000 \text { (debit) } \
\hline \text { Allowance for Bad Debts, December 31,2020 prior to adjustment } & 1500 \text { (debit) } \
\hline \text { Net credit sales for 2020 } & 180,000 \
\hline \text { Accounts written off as uncollectible during 2017 } & 16,000 \
\hline \text { Cash sales during 2020 } & 26,000 \
\hline
\end{array}$$ Bad debts expense is estimated by the percent-of-sales method.Management estimates that 6% of net credit sales will be uncollectible.Calculate the amount of bad debts expense for 2020.
A) $10,800
B) $8220
C) $12,360
D) $9300

Quizplus · Accepted Answer

The bad debts expense is calculated as 6% of net credit sales: 0.06 * $180,000 = $10,800.

The Following Information Is from the 2020 Records of R