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5 December, 08:39

Libre, Inc. has experienced bad debt losses of 5% of credit sales in prior periods At the end of the year, the balance of Accounts Receivable is $121,000 and the Allowance for Doubtful Accounts has an unadjusted credit balance of $1,550 Net credit sales during the year were $192,000. Using the percentage of credit sales method, what is the estimated Bad Debt Expense for the year? Multiple Choice $6,050 $9100 $9,600

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  1. 5 December, 10:05
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    debit Bad debt Expense = $9,600

    so correct option is $9,600

    Explanation:

    given data

    bad debt losses = 5%

    Accounts Receivable = $121,000

    unadjusted credit balance = $1,550

    Net credit sales = $192,000

    to find out

    estimated Bad Debt Expense for the year

    solution

    first we get here Bad debt expense by percentage of credit sales method that is

    Bad debt expense = credit Sales * percentage of bad debt losses

    Bad debt expense = $192,000 * 5%

    Bad debt expense = $9,600

    so here we can say $9,600 will be recorded as

    debit Bad debt Expense = $9,600

    and credit Allowance for doubtful debts = $9,600

    so here revised balance in Allowance for doubtful debts is $9,600 + $1,550 = $11150

    so correct option is $9,600
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