Question 3 (20 points) Compute bad debt expenses based on the following informat

Question

Question 3 (20 points) Compute bad debt expenses based on the following information: (a) Alpha Company estimates that 3% of net credit sales will become uncollectible. Credit sales are $300,000, sales returns and allowances are $15,000, and the allowance for doubtful/uncollectible accounts has a $1,000 credit balance. (b) Alpha Company estimates that 2% of accounts receivable will become uncollectible. Accounts receivable are $70,000 at the end of the year, and the allowance for doubtful/uncollectible accounts has a $1,000 credit balance.

What are the:

Bad debt expense for question (a)

Bad debt expense for question (b)

Explanation / Answer

Compute bad debt expense :

a) Bad debt expense = (300000-15000)*3% = $8550

b) Bad debt expense = (70000*2%)-1000 = $400

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