Given below is the data: Accounts Receivable $64,780 Allowance for Uncollectible Accounts $865 credit Gross Sales $345,700 Charge sales $185,300 The aging of accounts receivable indicates uncollectible accounts of $2,295. A. What is the amount of bad debt expense if the aging method is used to estimate uncollectible accounts? B. If the company were to estimate uncollectible accounts based on 2% of charge sales, what would be the amount of bad debt expense?
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Given below is the data:
Allowance for Uncollectible Accounts $865 credit
Gross Sales $345,700
Charge sales $185,300
The aging of accounts receivable indicates uncollectible accounts of $2,295.
A. What is the amount of
B. If the company were to estimate uncollectible accounts based on 2% of charge sales, what would be the amount of bad debt expense?
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