Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 8 - No. 4)
Which of the following is a key step when using the percentage of sales method for estimating bad debt expense?
Calculating the estimated uncollectible amount based on ending accounts receivable.
Multiplying credit sales by the estimated percentage of uncollectible accounts.
Determining the accounts to be written off as bad debts.
Ignoring the beginning balance in the allowance for doubtful accounts.
Explanation
The percentage of sales method uses credit sales and a percentage to estimate bad debt expense.
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