***** Here is the first part of the question that was answered in a separate post ******

Abernathy's Department Store offers credit to approved customers. In 20X1, total sales for the store were $1,340,997. Of this, 49% of sales are made on Visa, MasterCard, and American Express. 25% is sold by debit card, and the remainder is sold on Abernathy's own credit card. Bill Taylor, the VP-Finance for the store has looked over the sales that took place on the Store's own card, and determined the following information:

Accounts Receivable balance at year-end (December 31, 20X1) = $20,514.34

Of the accounts receivable, the following represents the aging:

Current	30 days	60 days	90 days	>90 days
41%	28%	18%	8%	5%

Of the dollar amounts from the above aging table, 5% of the current A/R is estimated to become bad debt, 6% of the 30-day old amounts, 7% of the 60-day, 22% of 90-day, and 58% of >90-day represent the total amount of potential bad debt.

On annual credit sales on the Department Store's own accounts, the bad debt amount is estimated at 3%

At the start of the year, the Allowance for Doubtful Accounts account had a credit balance of $1,743.3. During the year, the actual accounts written off against the allowance amounted to $787.

Required:

What if Abernathy's made use of the Balance Sheet/Accounts Receivable method for determining its Allowance for Doubtful Accounts? Calculate the amount of the Bad Debt Expense adjustment at year-end to account for bad debts. Show all your rough work and submit at end of Test. (20 marks)

Should Abernathy's Department Store consider using the Direct Write-Off method for recording bad debts? State your opinion, with reasons. Assuming that the amount of bad debt write-off for the year is $789.94, credit sales are $260,000, if the store did make use of this method, what would be the amount of Bad Debt Expense for the year for 20X1? If the accounts were written off at year end, provide the journal entry. (5 marks) For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac)