Libby Company Uses the Percentage of Credit Sales Method for Calculating

Multiple Choice

Libby Company uses the percentage of credit sales method for calculating Bad Debt Expense.The company reported $216,000 in total sales during the year;$178,000 of which were on credit.Libby has experienced bad debt losses of 5% of credit sales in prior periods.What is the estimated amount of Bad Debt Expense for the year?

A) $10,800
B) $8,900
C) $38,000
D) $1,900