Asked by Jaiye Otulana on May 29, 2024
Verified
When using the percentage of credit sales method,net sales multiplied by a historical percentage for credit losses equal bad debt expense.
Percentage of Credit Sales Method
An accounting technique used to estimate the value of uncollectible accounts receivable based on a historical percentage of sales that resulted in bad debts.
Net Sales
The amount of sales generated by a company after deducting returns, allowances for damaged or missing goods, and any discounts allowed.
Credit Losses
Financial losses that a lender anticipates or experiences due to borrowers failing to make required payments.
- Comprehend the procedures and impacts of listing an expense as bad debt.
Verified Answer
Learning Objectives
- Comprehend the procedures and impacts of listing an expense as bad debt.
Related questions
A Change in the Percentage Rate Used to Estimate Bad ...
The Gross Accounts Receivable Approach Is Consistent with the Accrual ...
Under the Sales Revenue Approach,no Bad Debt Expense Is Recorded ...
At the End of the Current Year, Accounts Receivable Has ...
At the End of the Current Year, Accounts Receivable Has ...