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All sales are made on credit. Based on past experience, the company estimates that 0.5% of net credit sales are uncollectible. What amount should be debited to Bad Debts Expense when the year-end adjusting entry is prepared?

Respuesta :

Answer:

$4,400

Explanation:

The computation of the amount which is debited to a bad debt expense account is shown below:

=  Net Credit sales × estimated percentage given

= $880,000 × 0.5%

= $4,400

The journal entry is shown below;

Bad debt expense A/c Dr  $4,400

  To Allowance for doubtful debts  $4,400

(Being bad debt expense is recorded)

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