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The Allowance for Bad Debts account has a credit balance of $5,000 before the adjusting entry for bad debts expense. The company's management estimates that 22% of net credit sales will be uncollectible for the year 2017. Net credit sales for the year amounted to $280,000. What is the amount of Bad Debts Expense reported on the income statement for 2017?

Respuesta :

jepessoa

Answer:

$61,600

Explanation:

The company should include the total amount of their uncollectible accounts in the income statement for year 2017.

If management estimates that 22% of net credit sales are bad credit, then $61,600 (= 22% x $280,000) should be included in the income statement as Bad Debt Expense.