Percentage Of Sales Method
ModerateModerate
Common Journal Entries
| Account | Debit | Credit |
|---|---|---|
| 1. Estimate from credit sales | ||
| $300,000 credit sales × 1.5% = $4,500. | ||
| Bad Debt Expense | $4,500 | |
| Allowance for Doubtful Accounts | $4,500 | |
| Income-statement approach; existing allowance balance ignored. | ||
DurationShort-Term
Related Subjects
Related
- Percent-of-Sales MethodSame concept, alternative name
- Allowance MethodAn estimation approach within the allowance method
Contrast
- Percent-of-Receivables MethodBalance-sheet approach vs. this income-statement approach
Produces
- Bad Debt ExpenseComputes expense as a percentage of credit sales