Calculating Bad Debt Expense
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NOTE 12 - BAD DEBT EXPENSE
The company is estimating that 1% of sales will be deemed as bad debt expense. Below provides the calculation used in determining the Company's yearly bad debt expense.
| YEAR 1 | YEAR 2 | YEAR 3 | |
| Total Sales | $582,401 | $673,775 | $784,411 |
| Bad Debt Percentage of Sales | 1% | 1% | 1% |
| Total Yearly Bad Debt Expense | $ 5,824 | $ 6,738 | $ 7,844 |
The total bad debt expense is assumed to be uncollectible and thus completely written off in the year incurred. As a result, the Company will not establish an allowance for doubtful account, nor an account receivable.