Question

Maple Co. provides for bad debts expense at the rate of 2.21% of credit sales for the period. On Jan 1, 20X1, the Allowance for Bad Debts was $9,000. There were $16,000 of accounts written off during the year. Credit sales for the year were $710,000. What is this year's bad debt expense?

Answer 1

To calculate this year's bad debt expense, follow the formula: Bad Debt Expense = Beginning Allowance + Amount Written Off - Ending Allowance.

Step-by-step explanation:

To calculate this year's bad debt expense, we need to consider the changes in the Allowance for Bad Debts account. The formula for calculating bad debt expense is: Bad Debt Expense = Beginning Allowance + Amount Written Off - Ending Allowance.

In this case, the beginning allowance is $9,000, and $16,000 of accounts were written off during the year. To find the ending allowance, we need to calculate 2.21% of credit sales for the period. Multiply $710,000 by 2.21% to find the ending allowance. Then, we can substitute the values into the formula to find the bad debt expense for this year.