Evaluate the following scenarios, assuming both companies use the next credit sales as the basis for estimating bad debts expense:
At year end, Bonnie Company has accounts receivables of $112,000. The allowance for uncollectible accounts has a balance prior to adjustment of ($400). In other words, there were fewer specific write-offs than estimated, leaving an excess in the allowance account. Net credit sales for the year were $315,000 and 3% is estimated to be uncollectible.
The bad debts expense for the year: