A company used the percent of sales method to determine its bad debts expense. A

Question

A company used the percent of sales method to determine its bad debts expense. At the end of the current year, the company's unadjusted trial balance reported the following selected amounts:

All sales are made on credit. Based on past experience, the company estimates .40% of credit sales to be uncollectible. What amount should be debited to Bad Debts Expense when the year-end adjusting entry is prepared?

$3505

$968

$3840

$3040

$3440

Accounts receivable $242,000 debit Allowance for uncollectible accounts 400 credit Net Sales 860,000 credit

Explanation / Answer

answer is 3440 = 860000*.40% = 3440

would be debited into bad debt expense account

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