Asked by Isabel Sanchez on Jul 16, 2024
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A company using the percentage of sales method for estimating bad debts has sales of $350,000 and estimates that 1.0% of its sales are uncollectible.The unadjusted balance in Allowance for Doubtful Accounts is a $300 credit.The estimated amount of bad debts expense is $3,200
Percentage of Sales Method
A financial forecasting model that assumes certain expenses and incomes will vary directly with sales.
Allowance for Doubtful Accounts
A contra-asset account that estimates the portion of accounts receivable which may not be collectible.
Bad Debts Expense
An expense account reflecting estimated uncollectible accounts receivable.
- Engage the percentage of total sales method alongside the accounts receivable aging practice to gauge potential bad debts.
Verified Answer
Learning Objectives
- Engage the percentage of total sales method alongside the accounts receivable aging practice to gauge potential bad debts.
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