Use this information to answer the following question. The general ledger accoun

Question

Use this information to answer the following question. The general ledger account for Accounts Receivable shows a debit balance of $50,000. Allowance for Uncollectible Accounts has a credit balance of $1,000. Net sales for the year were $522,000. In the past, 2 percent of sales have proved uncollectible, and an aging of accounts receivable accounts results in an estimate of $13,500 of uncollectible accounts. Using the percentage of net sales method, Uncollectible Accounts Expense would be debited for a. $9,440. b. $11,440. c. $10,440. d. $1,000.

Explanation / Answer

Hey Dear Student !!

In Net Sales Method we have to calculate Bad/un collectable Debts as a percentage expected bad debts of total credit Sales. Further in this method we will not consider any opening balance in Bad Debt Allowance Account.

So in given problem answer would be calculated as follows:-

Total Credit Sales: $522000
Expected % of Bad Debt: 2%

Bad debt Expense: 522000X2%=

$10440

Pleasure Teaching You !!

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