Question

Daniels Golf Supplies ended its first year with

$65,000

of accounts receivable and estimates that

2​%

of that amount will never be paid. No account has been specifically identified as​ non-paying at the date of the​ year-end balance sheet. What will the income statement for the year show as the bad debts expense if Daniel uses the allowance method of accounting for bad​ debts?

Answer 1

Answer:

Bad debt expense is $1,300

Calculations:

Allowance for doubtful accounts, Ending balance [$65,000 x 2%]	$1,300
(Less): Allowance for doubtful accounts, Beginning balance [Assumed]	$0
Bad debt expense	$1,300

Thus,

The income statement for the year shows as the bad debts expense if Daniel uses the allowance method of accounting for bad​ debts is $1,300