Here is information related to Aris Company for 1998:

\section*{Instructions}

(a) What amount of bad debts expense will Aris Company report if it uses the direct write-off method of accounting for bad debts?

(b) Assume that Aris Company decides to estimate its bad debts expense based on \(4 \%\) of accounts receivable. What amount of bad debts expense will Aris Company record if the Allowance for Doubtful Accounts has a credit balance of \(\$ 4,000\) ?

(c) Assume the same facts as in part (b), except that there is a \(\$ 2,000\) debit balance in Allowance for Doubtful Accounts. What amount of bad debts expense will Aris record?

(d) What is the weakness of the direct write-off method of reporting bad debts expense?

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Total credit sales Accounts receivable at December 31 Bad debts written off $1,800,000 600,000 26,000