Computing Bad Debts Under the Allowance Method Based on Sales Solstice Inc. has a credit balance of $1,080 in its allowance for doubtful accounts. The amount of credit sales for the period is $144,000, and the balance in accounts receivable is $27,000. Assume that the bad debt estimates are 0.5% of credit sales. What is (1) bad debt expense for the year and (2) the ending balance in the allowance for doubtful accounts? 1. Bad debt expense $ 0 2. Allowance for doubtful accounts $ 0