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Calistoga Produce estimates bad debt expense at 0.30% of credit sales. The company reported accounts receivable and allowance for uncollectible accounts of $474,000 and $1,550 respectively, at December 31, 2020. During 2021, Calistoga's credit sales and collections were $327,000 and $315,000, respectively, and $1,840 in accounts receivable were written off. Calistoga's 2021 bad debt expense is: Multiple Choice $981. $945. $791. $1,650.

Respuesta :

Answer: $981

Explanation:

From the question, bad debt expense is given as 0.30% of credit sales.

For 2020:

Accounts receivable = $474,000

Allowance for collectible accounts = $1,550

For 2021:

Credit sales = $327,000

Collections = $315,000

Accounts receivable written off = $1,840

Calistoga's 2021 bad debt expense will be:

= 0.30% × credit sales

= 0.0030 × $327,000

= $981

The bad debt expense is $981

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