Question
You collect the following info for company XYZ: Year 1: credit sales revenue of 32,000 and gross receivables of 8,000 less an allowance for doubtful
You collect the following info for company XYZ:
Year 1: credit sales revenue of 32,000 and gross receivables of 8,000 less an allowance for doubtful accounts of 300.
Year 2: credit sales revenue of 38,500 and gross receivables of 12,000 less an allowance for doubtful accounts of 1,000. you also note that during year 2 the company wrote off receivables totaling 400 and recovered 50 of previously written off receivables.
1.) What was company XYZ's bad debt expense during year 2?
2.) Assuming company XYZ uses the percentage of credit sales to calculate bad debt expense for year 2, what percentage did they use? Round to the nearest percent
3.) Assuming Company XYZ uses the percentages of ending accounts receivable to calculate bad debt expense for year 2, what percentage did they use?
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