J & B Company uses the percentage of sales approach to estimate its uncollectible accounts. The company’s annual sales for its first financial year of operations ending July 31, 2020 was $500,000, cash sales contributed to 2% of the overall sales and the 3 accounts receivable balance at year end was $75,000. Based on industryexpectations, it estimated that 3% of its credit sales would be uncollectible.Required:Calculate the bad debt expense at July 31, 2020. Calculate the net receivable balance that would be reported in the Statement of Financial Position as at July 31, 2020.

Credit sales = total sales - cash sales = $500000 - 500000*2% = $490, 000

Answered: J & B Company uses the percentage of…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter5: Sales And Receivables

Section: Chapter Questions

Problem 65E: Average Uncollectible Account Losses and Bad Debt Expense The accountant for Porile Company prepared...

See similar textbooks

Related questions

Question

J & B Company uses the percentage of sales approach to estimate its uncollectible accounts. The company’s annual sales for its first financial year of operations ending July 31, 2020 was $500,000, cash sales contributed to 2% of the overall sales and the 3 accounts receivable balance at year end was $75,000. Based on industry

expectations, it estimated that 3% of its credit sales would be uncollectible.

Required:

Calculate the bad debt expense at July 31, 2020.
Calculate the net receivable balance that would be reported in the Statement of Financial Position as at July 31, 2020.

Expert Solution

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions