PERCENTAGE OF CREDIT SALES METHOD At December 31, 2009, Garner has a $1,000 credit balance in its allowance for doubtful accounts. Garner estimates that 1.5 percent of its 2010 credit sales will eventually default. During 2010, Garner had credit sales of $575,000.

Required:

Estimate the bad debt expense under the percentage of credit sales method.

Cornerstone Exercise