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Bad Debts Expense On A Year-End Income Statement

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Extreme Sport, Inc. uses the allowance method to account for bad debits. During 2010, the company recorded $560,000 in credit sales. At the end of 2010 and before adjustments, account balances were accounts receivable $180,00, and allowance for uncollectable accounts ($900), If bad debt expense is estimated to be 3% of credit sales, how much bad debts expense will be on that year-end income statement?

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Solution Preview

Hi there,

Here is my response to your question:

This is how the accounts would be recorded:

An allowance for Bad Debt ...

Solution Summary

A look at credit sales reporting and the effect on accounts receivable and allowance for uncollectable accounts.