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Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $47000. If the balance of the Allowance for Doubtful Accounts is $5400 credit before adjustment what is the amount of bad debt expense for that period?

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Nyctalus

Answer: $41,600

Explanation: The percentage of receivables method is used to evaluate the amount of bad debt the company can experience in future. Under this method, the bad debt expense is the difference between the ledger balance and the actual balance of bad debt expense.

In the given case, we can calculate it as follows :-

Bad debt expense = estimated uncollectible accounts - allowance

                                = $47,000 - $5,400

                                = $41,600

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