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19 January, 00:13

Line Drive Apparel has outstanding accounts receivable totaling $856,000 as of December 31 and sales on credit during the year of $3.4 million. There is also a debit balance of $12,000 in the allowance for doubtful accounts and the company estimates that 2% of its net credit sales will be uncollectible. what will be the balance in the bad debt expense account after the year-end adjustment to record bad debt expense?

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  1. 19 January, 01:51
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    balance = $7120

    Explanation:

    given data

    outstanding accounts receivable totaling = $856,000

    sales on credit = $3.4 million

    debit balance = $12,000

    net credit sales = 2%

    solution

    we get here Allowance balance after all adjustment:

    Allowance balance = Outstanding accounts receivable * Estimates percent of accounts receivable

    Allowance balance = $856,000 * 2%

    Allowance balance = $17120

    balance in the bad debt expense account after the year-end adjustment is

    balance = $17120 - debit balance

    balance = $17120 - $12000

    balance = $7120
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