Information related to Mingenback Company for 2017 is summarized below.

Total credit sales $2,500,000

Accounts receivable at December 31 875,000

Bad debts written off 33,000

Instructions

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

(b) Assume that Mingenback Company estimates its bad debt expense to be 2% of credit sales. What amount of bad debt expense will Mingenback record if it has an Allowance for Doubtful Accounts credit balance of $4,000?

(c) Assume that Mingenback Company estimates its bad debt expense based on 6% of accounts receivable. What amount of bad debt expense will Mingenback record if it has an Allowance for Doubtful Accounts credit balance of $3,000?

(d) Assume the same facts as in (c), except that there is a $3,000 debit balance in Allowance for Doubtful Accounts. What amount of bad debt expense will Mingenback record?

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