How To Calculate The Uncollectible Accounts Expense. The formula to determine the amount of the ending estimated bad debts entry is: Calculate what percentage of sales is going to be uncollectable.

Using the results of part 1, calculate the christopher corporation’s january uncollectible accounts expense if january’s credit sales are $4,000,000. For example, for an accounting period, a business reported net credit sales of $50,000. The first one is known as aging method or balance sheet approach and the second one is known as sales method or income statement approach.

How To Calculate The Bad Debt Expense. The bad debt expense for the current year is estimated by multiplying the bad debt percentage by the projected credit sales. The table below shows how a company would use the accounts receivable aging method to estimate bad debts.

The allowance for bad debts can be calculated by dividing the anticipated bad debt by the total amount of sales expected and multiplying this figure by 100. The bad debt expense for the current year is estimated by multiplying the bad debt percentage by the projected credit sales. For this example we will say this is 10%.

How To Compute Doubtful Accounts Expense. When an actual debtor becomes unrecoverable, such an account is debited, and the receivable account balance is reduced by crediting. Units should consider using an allowance for doubtful accounts when they are regularly providing goods or services “on credit” and have experience with the collectability of those accounts.

Aging of accounts receivable another way you can calculate ada is by using the aging of accounts receivable method. The company does not require to estimate the percentage of the uncollectible debt. 3.3 bad debt expense and the allowance for doubtful accounts.