Niagara Art is a new business
During its first year of operations, credit sales were $41,000 and collections of credit sales were $37,000. One account, $700, was written off. Management uses the percent-of-sales method to account for bad debts expense and estimates 2% of credit sales to be uncollectible. Bad debts expense for the first year of operations is ________.
A) $120
B) $820
C) $700
D) $1,560
B .Bad debts expense = ($41,000 x 0.02 ) = $820
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