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Bradford Plumbing had the following data for a recent year: Credit sales $547,900 Allowance for doubtful...

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Accounting

Bradford Plumbing had the following data for a recent year:Credit sales $547,900 Allowance for doubtful accounts, 1/1 (acredit balance) 8,740 Accounts receivable, 1/1 42,340 Collectionson account receivable 489,770 Accounts receivable written off14,250 Bradford estimates that 1.9% of credit sales will eventuallydefault. Required: 1. Compute bad debt expense for the year(rounding to the nearest whole number). $ 2. Determine the endingbalances in accounts receivable and allowance for doubtfulaccounts. Ending Balance Accounts receivable $ Allowance fordoubtful accounts $

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3.7 Ratings (565 Votes)

1 Bad debt expense = Credit sales X Estimated bad debts percentage
= $547900 X 1.90%
= $       10,410
2 Ending Balance of Accounts receivables:
Beginning balance = $       42,340
Add: Sales = $   5,47,900
Less: Collections = $   4,89,770
Less: Amount write off = $       14,250
Ending Balance = $       86,220
Ending Balance of Allowance for doubtful accounts:
Beginning balance = $         8,740
Add: Bad debt expense = $       10,410
Less: Amount write off = $       14,250
Ending Balance = $         4,900

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