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Financial information for CNG Inc. follows: 2009 2008 2007 Credit sales $ 205,000 $ 200,000 $ 180,000 Actual bad debt write-offs 11,000 10,000 6,000 The
Financial information for CNG Inc. follows:
| 2009 | 2008 | 2007 |
Credit sales | $ 205,000 | $ 200,000 | $ 180,000 |
Actual bad debt write-offs | 11,000 | 10,000 | 6,000 |
The company estimate bad debt for financial reporting purposes at 3 percent of credit sales. The balance in Allowance for Doubtful Accounts as of January 1, 2007, was $10,000.
Compute the balance in Allowance for Doubtful Accounts as of December 31, 2009 and comment on the sufficiency of the bad debt expense and allowance over the three-year period. How did you come to your conclusion?
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