Brief Exercise 13-8 North Company has completed all of its operating budgets. The sales budget for the year shows 50,000 units and total sales of $2,250,000. The total unit cost of making one unit of sales is $25. Selling and administrative expenses are expected to be $300,000. Interest is estimated to be $10,000. Income taxes are estimated to be $200,000. Prepare a budgeted multiple-step income statement for the year ending December 31, 2017.

$23,300

Explanation:

Bad debt Expense will be calculated using the account receivable method. The expense is calculated using the account receivable aging analysis.

Closing Value of the Allowance for Doubtful Accounts will be as follow

As Allowance for Doubtful Accounts already have Credit balance of $12,200, we need to adjust the remainder to make the closing credit balance of Allowance for Doubtful Accounts $35,500 at the year end.

Adjustment Value = $35,500 + $12,200 = $23,300

This Expense will be recorded as follow

Dr.   Bad Debt Expense                         $23,300

Cr.   Allowance for Doubtful Accounts $23,300