Solution-What amount of bad debts expense would appear

What amount of bad debts expense would appear

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Reference no: EM132488855

Point 1: Majestic Equipment Sales Company, which sells only on account, had a $136,000 balance in its Accounts Receivable and a $5,700 credit balance in its Allowance for Doubtful Accounts on December 31, 2019. During 2020, the company's sales of equipment were $836,000 and its total cash collections from customers were $791,000. During the year, the company concluded that customers with accounts totalling $6,500 would be unable to pay, and wrote these receivables off. However, one of these customers subsequently made a payment of $850. (Note that this amount is not included in the cash collections noted above.) At the end of 2020, management decided that it would use an estimate for bad debts of 1% of its credit sales.

Majestic Equipment Sales Company

Statements of Financial Position (Partial)

As at December 31, 2020

Acoounts Receivable $ 174500

Less : Allowance for Doubtful Accounts ?

Net Acoounts receivable ?

Question 1: What amount of bad debts expense would appear in the statement of income for the year ended December 31, 2020?

Reference no: EM132488855

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What amount of bad debts expense would appear

Reference no: EM132488855

Reference no: EM132488855

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