T-lere is information related to Mingenback Company for 2022.

Instructions.
a. What amount of bad debt expense will Mingenback Company report if it uses the direct write-off method of accounting for uncollectibles?
b. Assume that Mingenback Company uses the percentage-of-receivables basis to record bad debt expense and concludes that 6% of accounts receivable will become uncollectible. What amount of bad debt expense will Mingenback record if Allowance for Doubtful Accounts has a credit balance of $3,000?
c. Assume the same facts as in (b ), except that there is a $3,000 debit balance in Allowance for Doubtful Accounts. What amount of bad debt expense will Mingenback record?
d. What is the weakness of the direct write-off method of recording bad debt expense?

Transcribed Image Text:

Total credit sales Accounts receivable at December 31 Uncollectibles written off $2,500,000 875,000 33,000