Information related to Mingenback Company for 2014 is summarized below. Bad debt
ID: 2473558 • Letter: I
Question
Information related to Mingenback Company for 2014 is summarized below.
Bad debts written off
31,800
Total credit sales $2,592,000 Accounts receivable at December 31 898,000Bad debts written off
(a) What amount of bad debt expense will Mingenback Company report if it uses the direct write-off method of accounting for bad debts?$ (b) Assume that Mingenback Company estimates its bad debt expense to be 3% of credit sales. What amount of bad debt expense will Mingenback record if it has an Allowance for Doubtful Accounts credit balance of $4,400? $ (c) 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? $ (d) 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? $
31,800
Explanation / Answer
a) Bad debt $31,800
b) Bad Debt = (2,592,000 * 3%) - 4,400 = $73,360
c) Bad debt = (898,000*5%) - 3,300 = $41,600
d) Bad debt = (898,000*5%) - 3,300 = $41,600