Question

Explain the methods that can estimate bad debt expenses in business. (Give numerical examples)

Answer 1

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Bad debt expenses in business can be estimated using:
% of sales method or
% of account receivables method or
% of sales method or	Amount $
Credit sales	307,000.00
Uncollectible %	6%
Uncollectible amount	18,420.00
Less: Credit balance in allowance for uncollectible account	5,700.00
Bad Debt Expense	12,720.00
% of account receivables method	Amount $
Accounts Receivable	132,000.00
Uncollectible %	9%
Uncollectible amount	11,880.00
Less: Credit balance in allowance for uncollectible account	5,700.00
Bad Debt Expense	6,180.00