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What amount of bad debts expense will bee record

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Reference no: EM131144334

Information related to Bee Company for 2010 is summarized below.

Total credit sales........... $1,100,000
Accounts receivable at December..... 31 369,000
Bad debts written off.......... 22,150

Instructions

(a) What amount of bad debts expense will Bee Company report if it uses the direct write-off method of accounting for bad debts?

(b) Assume that Bee Company decides to estimate its bad debts expense to be 2% of credit sales. What amount of bad debts expense will Bee record if Allowance for Doubtful Accounts has a credit balance of $3,000?

(c) Assume that Bee Company decides to estimate its bad debts expense based on 6% of accounts receivable. What amount of bad debts expense will Bee Company record if Allowance for Doubtful Accounts has a credit balance of $4,000?

(d) Assume the same facts as in (c), except that there is a $2,000 debit balance in Allowance for Doubtful Accounts.What amount of bad debts expense will Bee record?

(e) What is the weakness of the direct write-off method of reporting bad debts expense? 

Reference no: EM131144334

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