Flyer Company has provided the following information prior to any year-end bad debt adjustment:
Flyer estimates bad debt expense assuming that 1% of credit sales have historically been uncollectible. What is the balance in the allowance for doubtful accounts after bad debt expense is recorded?
|Bad debts recorded (456000 x 1%)||$ 4,560.00|
|Add: Allowance for doubtful debts current balance||$ 1,800.00|
|Net balance in allowance account||$ 6,360.00|
Calculation of bad debts using % of sales method does not adjust the balance in allowance account before recording bad debts.
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