Enter the total sales for the accounting period and estimated % or bad debt into the calculator to determine the bad debt expense.
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Bad Debt Expense Formula
The following formula is used to calculate a bad debt expense.
BDE = S * BD
- Where BDE is the bad debt expense ($)
- S is the total sales for the accounting period ($)
- BD is the percentage of total sales uncollectable (%) (bad debt)
To calculate a bad debt expense, multiply the total sales by the percentage of sales un-collectable.
Bad Debt Expense Definition
A bad debt expense is defined as the total percentage of debt or outstanding credit that is uncollectable.
Bad Debt Expense Example
How to calculate bad debt expense?
- First, determine the total credit sales.
Calculate the total credit sales for the time period being analyzed. For this example we will say this is $1,000.00.
- Next, determine the total percentage of sales uncollectable.
Calculate what percentage of sales is going to be uncollectable. For this example we will say this is 10%
- Finally calculate the bad debt expense.
Using the formula above, we find the bad debt expense to be $1,000.00 * 10% = $100.00.
A bad debt expense is a measure of the total amount of “bad debt” during an accounting period. Bad debt is all debt or outstanding credit sales that cannot be collected on during a given period.