The Allowance for Bad Debts account has a credit balance of $ 2 comma 000 before the adjusting entry for bad debts expense. The company's management estimates that 4% of net credit sales will be uncollectible for the year 2019. Net credit sales for the year amounted to $ 260 comma 000. What is the amount of Bad Debts Expense reported on the income statement for 2019?

$8,400

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 eventually becomes uncollectible,  the entries required are debit allowance for doubtful debt and credit accounts receivable.

Since the company's management estimates that 4% of net credit sales will be uncollectible for the year 2019 and the Net credit sales for the year amounted to $ 260 comma 000,

allowance for bad debt = 4% * $260,000

= $10,400

Given that the Allowance for Bad Debts account has a credit balance of $ 2 comma 000 before the adjusting entry for bad debts expense, the amount of bad debt expense to be reported on the income statement for 2019

= $10,400 - $2,000

= $8,400