Some Co. earned $697,000 in credit sales. Industry experience suggests that Fun Resort's
uncollectible accounts will amount to 2 percent of credit sales. On December 31, 2018, accounts
receivable totaled $ 196,797.
The company uses the allowance method-% of credit sales to account for bad debt expense.
697000*2%= 13940
DR debt expense $13940
CR allow doubtful acts $13940
Some Co. earned $1,462,000 in credit sales. Industry experience suggests that Fun Resort's
uncollectible accounts will amount to 3.5 percent of accounts receivables. On December31,
2018, accounts receivable totaled $ 275,000, and the allowance for doubtful accounts had a
credit balance of $ 200.
The company uses the allowance method-aging of receivables to account for bad debt expense.
275000*3.5%=$9625(balance in Allowance in doubtful accounts)
ADA DE bad debt expense $9425
CR Allow doubtful acts $9425
CR DR
200
9625-200= 9425
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9625
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