Question

The Manda Panda Company uses the allowance method to account for bad debts. At the beginning of 2016, the allowance account had a credit balance of $6,728. Credit sales for 2016 totaled $460,934 and the year-end accounts receivable balance was $49,224. During this year, $3,981 in receivables were determined to be uncollectible and were written off. Manda Panda anticipates that 1% of all credit sales will ultimately become uncollectible. What is the bad debt expense that Manda Panda should report in its 2016 income statement? $___

Answer 1

Calculate bad debt expense :

Bad debt expense = Credit sales*Percent un collectible

= 460934*1%

Bad debt expense = $4609.34 or $4609