Asked by Lopez Anibal on May 16, 2024
Verified
A company using the percentage of sales method for estimating bad debts has sales of $350,000 and estimates that 1.0% of its sales are uncollectible.The estimated amount of bad debts expense is $3,500.
Bad Debts Expense
The cost reported by a company due to the unrecoverable credit it extended to its customers, representing expected losses from unpaid financial obligations.
- Leverage the sales-based percentage methodology and the aging analysis of accounts receivable for bad debt estimation.
Verified Answer
NI
Nikkie ImperialMay 21, 2024
Final Answer :
True
Explanation :
$350,000 x 0.01 = $3,500, so the estimated bad debts expense of $3,500 is correct based on the percentage of sales method.
Learning Objectives
- Leverage the sales-based percentage methodology and the aging analysis of accounts receivable for bad debt estimation.
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