Information related to Mingenback Company for 2015 is summarized below. Total cr
ID: 2448325 • Letter: I
Question
Information related to Mingenback Company for 2015 is summarized below.
Total credit sales $2,594,000
Accounts receivable at December 31 895,000
Bad debts written off 32,900
1.)What amount of bad debt expense will Mingenback Company report if it uses the direct write-off method of accounting for bad debts?
3.) Assume that Mingenback Company estimates its bad debt expense based on 5% of accounts receivable. What amount of bad debt expense will Mingenback record if it has an Allowance for Doubtful Accounts credit balance of $3,300?
4.) Assume that Mingenback Company estimates its bad debt expense based on 5% of accounts receivable. What amount of bad debt expense will Mingenback record if it has an Allowance for Doubtful Accounts debit balance of $3,300?
2.) Assume that Mingenback Company estimates its bad debt expense to be 3% of credit sales. What amount of bad debt expense will Mingenback record if it has an Allowance for Doubtful Accounts credit balance of $4,300?Explanation / Answer
Solution :
Calculation of bad debts expense to be recognised
1.)What amount of bad debt expense will Mingenback Company report if it uses the direct write-off method of accounting for bad debts?
32,900
2.) Assume that Mingenback Company estimates its bad debt expense to be 3% of credit sales. What amount of bad debt expense will Mingenback record if it has an Allowance for Doubtful Accounts credit balance of $4,300?
(2594000*3%)
77,820
3.) Assume that Mingenback Company estimates its bad debt expense based on 5% of accounts receivable. What amount of bad debt expense will Mingenback record if it has an Allowance for Doubtful Accounts credit balance of $3,300?
(895000*0.05)-3300
41,450
4.) Assume that Mingenback Company estimates its bad debt expense based on 5% of accounts receivable. What amount of bad debt expense will Mingenback record if it has an Allowance for Doubtful Accounts debit balance of $3,300?
(895000*.05) + 3300
48,050
Calculation of bad debts expense to be recognised
1.)What amount of bad debt expense will Mingenback Company report if it uses the direct write-off method of accounting for bad debts?
32,900
2.) Assume that Mingenback Company estimates its bad debt expense to be 3% of credit sales. What amount of bad debt expense will Mingenback record if it has an Allowance for Doubtful Accounts credit balance of $4,300?
(2594000*3%)
77,820
3.) Assume that Mingenback Company estimates its bad debt expense based on 5% of accounts receivable. What amount of bad debt expense will Mingenback record if it has an Allowance for Doubtful Accounts credit balance of $3,300?
(895000*0.05)-3300
41,450
4.) Assume that Mingenback Company estimates its bad debt expense based on 5% of accounts receivable. What amount of bad debt expense will Mingenback record if it has an Allowance for Doubtful Accounts debit balance of $3,300?
(895000*.05) + 3300
48,050