"Flyer Company has provided the following information prior to any year-end bad debt adjustment: Cash sales, $150,000 Credit sales, $450,000 Selling and administrative expenses, $110,000 Sales returns and allowances, $30,000 Gross profit, $490,000 Accounts receivable, $110,000 Sales discounts, $14,000 Allowance for doubtful accounts credit balance, $1,200. Flyer estimates bad debt expense assuming that 1.5% of credit sales have historically been uncollectible. What is the balance in the allowance for doubtful accounts after bad debt expense is recorded? "

$7,950

Explanation:

Calculation for What is the balance in the allowance for doubtful accounts after bad debt expense is recorded

Using this formula

Allowance for doubtful accounts balance=Bad debt expense+Allowance for doubtful accounts credit balance

Let plug in the formula

Allowance for doubtful accounts balance= (1.5% × $450,000) +$1,200

Allowance for doubtful accounts balance=$6,750+$1,200

Allowance for doubtful accounts balance=$7,950

Therefore the balance in the allowance for doubtful accounts after bad debt expense is recorded will be $7,950

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