Week+3+Team+Assignment - 1 Running head CHAPTER 9-10 TEAM...

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1 Running head: CHAPTER 9-10 TEAM ASSIGNMENT Ch. 9-10 Team Assignments Ricardo E. Mendoza Olga Acosta University of Phoenix Debbie Luna ACC 281 Financial Accounting Transactions October 5, 2010
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Ch. 9-10 Team Assignments P9-2A Information related to Hermesch Company for 2008 is summarized below. Total credit sales $2,200,000 Accounts receivable at December 31 825,000 Bad debts written off 33,000 Instructions (a) What amount of bad debts expense will Hermesch Company report if it uses the direct write- off method of accounting for bad debts? $33,000 (b) Assume that Hermesch Company estimates its bad debts expense to be 2% of credit sales. What amount of bad debts expense will Hermesch record if it has an Allowance for Doubtful Accounts credit balance of $4,000? $40,000 (c) Assume that Hermesch Company estimates its bad debts expense based on 6% of accounts receivable. What amount of bad debts expense will Hermesch record if it has an Allowance for Doubtful Accounts credit balance of $3,000? 46,500 (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 debts expense will Hermesch record? $52,500
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