Business, 04.04.2020 02:03 octaviangh14

Information related to Mingenback Company for 2015 is summarized below.

Total credit sales $2,500,000
Accounts receivable at December 31 875,000
Bad debts written off 33,000
A. What amount of bad debt expense will Mingenback Company report if it uses the direct write-off method of accounting for bad debts?

B. Assume that Mingenback Company estimates its bad debt expense to be 2% of credit sales. What amount of bad debt expense will Mingenback record if it has an Allowance for Doubtful Accounts credit balance of $4,000?

C. Assume that Mingenback Company estimates its bad debt expense based on 6% of accounts receivable. What amount of bad debt expense will Mingenback record if it has an Allowance for Doubtful Accounts credit balance of $3,000?

D. Assume the same facts as in (c), except that there is a $3,000 debit balance in Allowance for Doubtful Accounts. What amount of bad debt expense will Mingenback record?

E. What is the weakness of the direct write-off method of reporting bad debt expense?

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Information related to Mingenback Company for 2015 is summarized below.

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