Question 9 2 points Pepper Paul have ending accounts receiv

Question 9 (2 points) Pepper & Paul have ending accounts receivable of 50,000. They estimate that 5% will be uncollectible and the allowance for doubtful accounts has a $1,000 credit balance. What is the amount of bad debt expense? Format

Solution

Under percentage of Accounts receivable bad debts expense is calculated based on the estimated percentage on accounts receivable at year end, less existing credit balance in Allowance for bad debt

In given Case Accounts receivable =$50000, estimate of bad debt = 6% ,balance in Allowance for doubtful accounts = $1000

Bad debt Expense= ($50000*6%)-$1000 = $2000