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Gladson Corporation accrues bad debt expense using the percentage ofsales method.
Gladson Corporation accrues bad debt expense using the percentage ofsales method. At the end of the year, Gladson has $450,000 in accountsreceivable and $4,000 in its allowance for doubtful accounts before anyentry is made for bad debts. Sales for the year were $1,900,000. Thepercentage that Gladson has historically used to calculate bad debts is 1percent of sales. Which of the following is true?a. Gladson’s bad debt expense for the year is $500.b. The percentage of sales method is designed to achieve an accuratebalance sheet presentation of the net realizable value of accountsreceivable.c. Gladson would report an allowance for doubtful accounts of$23,000.d. Gladson would need to make an adjustment because the $4,000remaining balance in the allowance for doubtful accounts indicatesthey estimated wrong last year.