Bad Debt as Percentage of Sales

In order to find out the allowance for doubtful debt figure, entity has to apply % to a value.This value may be based on accounts receivable ending balance or the sales figure of the reporting figure. Here we are talking about the sales method. In this method, we do not pay attention to the balance available in the allowance for doubtful account. Instead, we apply the certain percetage to the credit sales figure and pass on the following journal entry:

  Debit Credit
Bad debt expense abc  
       Allowance for doubtful debt   abc


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