Problem 8-4A Here is information related to Freeman Company for 2014. Total cred
ID: 2448251 • Letter: P
Question
Problem 8-4A Here is information related to Freeman Company for 2014. Total credit sales $1,581,000 Accounts receivable at December 31 790,500 Bad debts written off 48,300
What amount of bad debt expense will Freeman Company report if it uses the direct write-off method of accounting for bad debts?
Assume that Freeman Company decides to estimate its bad debt expense based on 3% of accounts receivable. What amount of bad debt expense will the company record if Allowance for Doubtful Accounts has a credit balance of $3,800?
Assume the same facts as in part (b), except that there is a $2,500 debit balance in Allowance for Doubtful Accounts. What amount of bad debt expense will Freeman record?
Explanation / Answer
Baddebt write off using direct method Journal Entry Bad debt write off a/c dr. $48,300 to account receivable $48,000 Case 2 Account receivable $790,500 3% $23,715 Credit balance $3,800 Net Baddebt $19,915 Case 3 Bad debt $23,715 Debit Balance $2,500 Total bad debt $26,215