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What is the total amount that parker should recorded as "bad debt expense" for the year ending December 31, 2005?

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The following information is available for the Parker Company:

Credit sales during 2005 $100,000
Allowance for doubtful accounts at December 31, 2004 1,200
Account receivable deemed worthless and written off during 2005 1,600

During 2005 Parker estimated that its bad debt expense should be 1% of all credit sales. As a result of a review and aging of accounts receivable in early January 2006, it has been determined that an allowance for doubtful accounts of $1,100 is needed at December 31, 2005.

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What is the total amount that parker should recorded as "bad debt expense" for the year ending December 31, 2005?

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The expert computes the total amount that parker should record as "bad debt expense".

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Answer to posting 80920- Calculation of Total Bad debts expenses.

There are two methods of for recording uncollectible accounts (1) Direct write off method ( 2 )Allowance method. Within the Allowance method there are two approaches to estimating bad debts expenses.
1 The percentage of sales approach
2 The percentage of Receivable Approach.
The percentage of sales approach matches cost and Revenue. In this approach bad debts are estimated as certain percentage of net ...

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