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

If Ava Company sets bad debt expense at 3 percent of its sales. Ava reported total sales of $ 71,572. The amount of  bad debt expense that Ava report on its income statement is $2,147.16.

Using this formula

Bad debt expenses=Total sales× Sales Percentage

Where:

Total sales=$71,572

Sales percentage=3%

Let plug in the formula

Bad debt expenses=$71,572×2%

Bad debt expenses=$2,147.16

Inconclusion if Ava Company sets bad debt expense at 3 percent of its sales. Ava reported total sales of $ 71,572. The amount of  bad debt expense that Ava report on its income statement is $2,147.16.

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