Bad Debt Accounting and journal entries
Not what you're looking for?
Here is information related to Kettle Moraine Company for 2007.
Total credit sales $1,500,000
Accounts receivable at December 31 440,000
Bad debts written off 31,000
Instructions:
(a) What amount of bad debts expense will Kettle Moraine Company report if it uses the direct write-off method of accounting for bad debts?
Formula
(b) Assume that Kettle Moraine Company decides to estimate its bad debts expense based on 3% of
accounts receivable. What amount of bad debts expense will the company record if Allowance for Doubtful
Accounts has a credit balance of $3,000
Amount X Percentage = Formula
Plus debit balance Amount
Formula
(c) Assume the same facts as in part (b), except that there is a $1,000 debit balance in Allowance for Doubtful
Accounts. What amount of bad debts expense will Kettle Moraine record?
Amount X Percentage = Formula
Plus debit balance Amount
Formula
(d) What is a weakness of the direct write-off method of reporting bad debts expense?
Purchase this Solution
Solution Summary
The solution calculates bad debts expense for Kettle Moraine Company under differenct bad debt accounting methods.
Purchase this Solution
Free BrainMass Quizzes
Business Ethics Awareness Strategy
This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.
Income Streams
In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.
Organizational Leadership Quiz
This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.
Writing Business Plans
This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.
Transformational Leadership
This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.