Question - 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. How much is Flyer's bad debt expense?
$6,750.
$7,800.
$5,550.
$7,950.