Unformatted text preview: Doubtful Accounts credit balance of $3,000? $ Assume that Hermesch Company estimates its bad debts expense based on 6% of accounts receivable. There is a $3,000 debit balance in Allowance for Doubtful Accounts. What amount of bad debts expense will Hermesch record? (a) $33,222. (b) $44,358.8 ($2,217,940 X 2%). (c) $47,014.2 [($833,570 X 6%) – $3,000]. (d) $53,014.2 [($833,570 X 6%) + $3,000]. (e) The weakness of the direct write-off method is two-fold. First, it does not match expenses with revenues. Second, the accounts receivable are not stated at cash realizable value at the balance sheet date....
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- Spring '11
- Balance Sheet, Double-entry bookkeeping system, Totaled, $2,200,000