A company has a credit balance of $ 700 in its allowance for doubtful accounts. The amount

Question:

A company has a credit balance of $ 700 in its allowance for doubtful accounts.

The amount of credit sales for the period is $ 80,000, and the balance in accounts receivable is $ 15,000. Assume that the bad debt estimates are as follows:

(a) Related to accounts receivable, 8% composite rate, or

(b) Related to credit sales, 0.4%. What would be the balance of the allowance for doubtful accounts and the bad debt expense, if

(a) The aging method were used (composite rate) and

(b) The credit sales method were used?

Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...