Question

Flyer Company has provided the following information prior to any year-end bad debt adjustment: Cash sales, $168,000 Credit sales, $468,000 Selling and administrative expenses, $128,000 Sales returns and allowances, $48,000 Gross profit, $508,000 Accounts receivable, $285,000 Sales discounts, $32,000 Allowance for doubtful accounts credit balance, $3,000 Flyer prepares an aging of accounts receivable and the result shows that 3% of accounts receivable is estimated to be uncollectible. What is the balance in the allowance for doubtful accounts after bad debt expense is recorded?

$8,550

$5,550

$5,460

$11,550

Answer 1

Solution:
	CALCULATION OF BAD DEBTS EXPENSES ON THE BASIS OF ACCOUNT RECEIVABLE
	Account Receivable =	$                285,000
	Estimated of Uncollectable	$                             0
	Estimated of Uncollectable amount	$                     8,550
	Estimated for the Uncollectable Amounts	$                     8,550
	Less : Beginning Balance of allowance for dubtful Accts	$                     3,000
	Bad Debt Expenses of the year	$                     5,550
	Bad debt Expenses recorded	$                     5,550
	Add: Beginning Balance of allowance for doubtfull accounts	$                     3,000
	Total Balance in Allowance for doubtfull accounts	$                     8,550
Answer = Option 1 = $ 8,550