What total amount of bad debts expense appears

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Question - Uncollectible Accounts and Reporting Receivables over Multiple Periods

Weiss Company, which has been in business for three years, makes all of its sales on credit and does not offer cash discounts. Its credit sales, customer collections, and write-offs of uncollectible accounts for its first three years follow.

Year

Sales

Collections

Accounts Written Off

2014

$733,00

$716,000

$5,300

2015

$857,000

$842,000

$5,800

2016

$945,000

$928,000

$6,500

A) Weiss recognizes bad debts expense as 1% of sales. (Hint: This means the allowance account is increased by 1% of credit sales regardless of any write-offs and unused balances.) What does Weiss' 2013 balance sheet report for accounts receivable and the allowance for uncollectible accounts? What total amount of bad debts expense appears on Weiss' income statement for each of the three years?

B) Comment on the appropriateness of the 1% rate used to provide for bad debts based on your analysis in part a.

Reference no: EM132198487

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