Question

Wasco Company 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 $100,000 and the Allowance for Doubtful Accounts has an unadjusted credit balance of $500. Net credit sales during the year were $150,000. Using the percentage of credit sales method, what is the estimated Bad Debt Expense for the year?

A) $5,000

B) $7,000

C) $7,500

D) $8,000

Answer

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