TEAM ASSIGNMENT Week 3

TEAM ASSIGNMENT Week 3 - P9-2A Information related to...

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Unformatted text preview: 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 33,000Instructions(a) What amount of bad debts expense will Hermesch Company report if it uses the direct write-off method of accounting for bad debts?(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 DoubtfulAccounts credit balance of $4,000?Prepare journal entries related to bad debts expense. (SO 2, 3, 9)(b) Accounts receivable $1,210,000 ADA $14,000 (c) Bad debts expense $101,000Compute bad debts amounts. (SO 3)(c) Assume that Hermesch Company estimates its bad debts expense based on 6% of accountsreceivable. What amount of bad debts expense will Hermesch record if it has an Allowancefor 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 forDoubtful Accounts. What amount of bad debts expense will Hermesch record?(e) What is the weakness of the direct write-off method of reporting bad debts expense?...
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TEAM ASSIGNMENT Week 3 - P9-2A Information related to...

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