Assume Simple Co. had credit sales of $256,000 and cost of goods sold of $156,000 for the period. Simple uses the percentage of credit sales method and estimates that 1 percent of credit sales would result in uncollectible accounts. Before the end-of-period adjustment is made, the Allowance for Doubtful Accounts has a credit balance of $310. What amount of Bad Debt Expense would the company record as an end-of-period adjustment

Respuesta :

Answer: $2560

Explanation:

A bad debt expense simply refers to a scenario whereby a receivable isn't collectible due to the fact that a customer isn't able to pay their outstanding debt.

Based on the information given in the question, the amount of bad debt expense that would be recorded by the company as an end-of-period adjustment will be:

= Credit sales × Percentage of uncollectible accounts

= $256000 × 1%

= $256000 × 0.01

= $2560