Buster's Furniture provides the following information for the year: Net credit sales for the year $985,750 Account
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Question:
Buster's Furniture provides the following information for the year:
Net credit sales for the year $985,750
Account receivables at the year end $450,000
Allowance for bad debts at year end $ 18,000 credit
Estimate bad debt expense for the year as (a) 5% of accounts receivable and (b) 2% of net credit sales. Discuss why Buster's Furniture might choose one approach over the other.
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