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Craigmont uses the allowance method to account for uncollectible accounts. Its year-end unadjusted trial balance shows Accounts Receivable of $138,500 and sales of $1,095,000. If uncollectible accounts are estimated to be 0.7% of sales, what is the amount of the bad debts expense adjusting entry

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abiolataiwo2015

The amount of the bad debts expense adjusting entry is:$7665.

Bad debt expenses

Using this formula

Bad debt expenses=Sales×Estimated sales percentage

Where:

Sales=$1,095,000

Estimated sales percentage=0.7%

Let plug in the formula

Bad debt expenses=$1,095,000×0.7%

Bad debt expenses= $7,665

Therefore the amount of the bad debts expense adjusting entry is:$7665.

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