Novak Corp. unadjusted trial balance includes the following balances (assume normal balances): • Accounts Receivable $1140000 • Allowances for Doubtful Accounts $20700 Bad debts are estimated to be 6% of outstanding receivables. What amount of bad debt expense will the company record? $68400 $47700 $46422 $70278

$47700

Explanation:

When a company makes sales on account, debit accounts receivable and credit sales. Based on assessment, some or all of the receivables may be uncollectible.  

To account for this, debit bad debit expense and credit allowance for doubtful debt. Should the debt become uncollectible (i.e go bad), debit allowance for doubtful debt and credit accounts receivable.

Given that Bad debts are estimated to be 6% of outstanding receivables

Bad debts = 6% * $1,140,000

= $68,400

Amount already accounted for as bad debt = $20700

Bad debt expense to be recorded = $68,400 - $20,700

= $47,700

the answer is b. the events might happen and are based on crimes.

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