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1. • CommentAuthortanvi192
   • CommentTimeFeb 24th 2007

    
   Hey,
   
   Could anyone of you let me know that if only net sale ( income statement) is given and the write off amount is given, how the could we calculate the gross sale to make a journal entry of the sale in that period. In the absence of any other information, can we assume net sale= gross sale. Also is this the right way to calculate gross sale= net sale + bad debt expense.
   
   Thanx
2. • CommentAuthorkinping
   • CommentTimeFeb 25th 2007

    
   If you are using direct method to write off the bad debt, I think your way to calculate gross sale is correct. gross sale= net sale + bad debt expense.
3. • CommentAuthortanvi192
   • CommentTimeFeb 25th 2007

    
   kinping, thanx for the reply.. could u help me in understanding why is that so .. isn't bad debt is an expense account. How could we add to the net sale to achieve gross sale. what about other expense accounts (cash allowance, discount on sale) if bad debt is treated like cash allowance, discount on sale account unlike administrative expense, other expense acounts.
   
   Will really appreciate ur help... Thanx
4. • CommentAuthorkinping
   • CommentTimeMar 1st 2007

    
   okay, let me think it through.
   
   first of all, gross sales inlcude A/R and cash sales.
   net sales=gross sales - sales allowance - sales discount
   many companies set up an Allowance for Dountful/Uncollectable Account to estimate the uncollectible A/R (usually with a credit balance) and transfer the estimates of doubtful A/R to Bad Debt (usually with a debit balance) on the income statment.
   
   To the best of my knowledge, there would be no such an equation as sale= net sale + bad debt expense. I am sorry that I misunderstood your question and gave you a misleading reply in my previous entry.
   
   As you mentioned above, Bad Debt is an expense account. It brings Net Sales to an actual value or a more realizable amount since it realizes the loss of problematic A/R.
   
   Hopefully this reply will help.