Hahn Company Uses the Percentage of Sales Method for Recording

question 265

Short Answer

Hahn Company uses the percentage of sales method for recording bad debt expense. For the year, cash sales are $300,000 and credit sales are $1,500,000. Management estimates that 1% is the sales percentage to use. What adjusting entry will Hahn Company make to record the bad debt expense?

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Definitions:

Permitted Actions

Actions that are allowed or sanctioned by law, regulation, or explicit permission.

Title

A legal term referring to the legal rights of ownership and possession of a particular property or asset.

Encumbrances

Legal claims or liabilities on property or assets that may affect their use or transferability, such as mortgages or liens.

Obligation

A legal or moral commitment to perform or refrain from performing some action.