Johnson Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense is established as a percentage of credit sales. For 2018, net credit sales totaled $5,800,000, and the estimated bad debt percentage is 1.40%. The allowance for uncollectible accounts had a credit balance of $55,000 at the beginning of 2018 and $46,500, after adjusting entries, at the end of 2018. Required: 1. What is bad debt expense for 2018 as a percent of net credit sales

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Business

Carlee Larsen

21 March, 12:39

Johnson Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense is established as a percentage of credit sales. For 2018, net credit sales totaled $5,800,000, and the estimated bad debt percentage is 1.40%. The allowance for uncollectible accounts had a credit balance of $55,000 at the beginning of 2018 and $46,500, after adjusting entries, at the end of 2018. Required: 1. What is bad debt expense for 2018 as a percent of net credit sales

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Aryanna Garza · Answer 1

Bad debt expense for 2018 is $81,200

Explanation:

2018 net credit sales = $5,800,000

Estimated bad debt percentage = 1.40%.

The allowance for uncollectible accounts had a credit balance of $55,000 at the beginning of 2018 and $46,500, after adjusting entries, at the end of 2018.

Bad debt expense = Estimated bad debt percentage * net credit sales

= 1.40% * $5,800,000

= $ 81,200