Question
Allowance Method The Huntington Company, which has been in business for three years, makes all of its sales on account and does not offer cash
Allowance Method The Huntington Company, which has been in business for three years, makes all of its sales on account and does not offer cash discounts. The firms credit sales, collections from customers, and write-offs of uncollectible accounts for the three-year period are summarized below:YearSalesCollectionsAccounts Written Off2015$600,000$574,000$4,2002016770,000760,0006,9002017850,000814,0007,300Requireda. If the Huntington Company had used the allowance method of recognizing credit losses and had provided for such losses at the rate of 1.3 percent of credit sales, what amounts in Accounts Receivable and the Allowance for Doubtful Accounts would appear on the firms balance sheet at the end of 2017? What total amount of bad debts expense would have appeared on the firms income statement during the three year period?b. Comment on the use of the 1.3 percent rate to provide for credit losses in part a
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