Question

Ava Company sets bad debt expense at 3 percent of its sales. Ava reported total sales of $ 71,572. Before the adjustment, Ava had $655 credit balance in its allowance for doubtful accounts. How much bad debt expense did Ava report on its income statement?

Answer 1

Answer:

The Amount to be reported of bad debt expense on the income statement is $ 2,147.16

Explanation:

Acording to the data, the company sets bad debt expense at 3 percent of its sales.

Total sales reported of the company is $ 71,572

Amount to be reported of bad debt expense on the income statement

=  $ 71,572× 3%

=   $ 2,147.16.

Answer 2

Answer:

Bad Debt expenses Ava reports on its income statement is $2,147.16 .

Explanation:

As Ava company bad debt expenses is calculated according to the percentage of sales; the current balance of allowance for doubtful accounts is irrelevant to deciding the bad debt expenses in the period.

The bad debt expenses recorded in the period is calculated as: Total credit sales x percentage of estimated bad debt from credit sales = 71,572 x 3% = $2,147.16.

So, the bad debt expenses recorded in the accounting period in the income statement is $2,147.16.