Example of Bad Debt Expense and Forecasting

Bad Debt Expense note to the financial statements

This note will tell the reader the rate or percentage at which you feel customers will default on "payment for purchases" from your company. An example of a bad debt expense note is as follows.

Bad Debt Expense:
The XYZ company is forecasting 5% of total sales will be bad debt. Moreover, the total amount of bad debt for each year, appearing on the 200X and 200Y forecasted income statement, is as follows;

200X 200Y
Bad Debt Expense per year $2,500 $2,870


Categories: Financial