Yates co. uses the allowance method to account for bad debts. at the end of the period, yate's unadjusted trial balance shows an accounts receivable balance of $10,000; allowance for doubtful accounts balance of $400 (credit); and sales of $500,000. based on history, yates estimates that bad debts will be 1% of sales. the entry to record estimated bad debts will include a debit to bad debts expense in the amount of:
a. $5,845b. $4,980c. $4,115d. $4,300e. $4,450

Debit to bad debts expense in the amount of $5,000

Explanation:

The computation of the bad debt expense is shown below:

= Credit sales × estimated percentage given

= $500,000 × 1%

= $5,000

The journal entries are  also shown below; for better understanding

Bad debt expense A/c Dr  $5,000

  To Allowance for doubtful debts  $5,000

(Being bad debt expense is recorded)

The other information which is given in the question is not relevant. Hence, ignored it

answer; i believe the correct answer is (form utility); good luck

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