Question

Assume you are the controller of a manufacturing plant that sells light machinery to businesses in the surrounding area. You are currently training new employees, and in a recent training session, you report that total credit sales for the year is $300,000, accounts receivable total $40,000 less a $2,000 allowance for bad debts, and bad debt expense is $3,500. After the session, a trainee approaches somewhat confused about why bad debt expense and the allowance balance differ.
Required
Prepare a written explanation to the trainee on the difference between bad debt expense and the allowance for bad debts.


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  • CreatedJuly 16, 2015
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