Question
Information related to Rashford PTY LTD for 2016 is. Total credit sales $1,640,000 Accounts receivable as at 30 June 620,000 Doubtful debts written off 26,000
Information related to Rashford PTY LTD for 2016 is.
Total credit sales | $1,640,000 | |
Accounts receivable as at 30 June | 620,000 | |
Doubtful debts written off | 26,000 |
1. What amount of doubtful debts expense will Rashford PTY LTD report if it uses the direct write-off method of accounting for doubtful debts?
2. Assume that Rashford PTY LTD decides to estimate its doubtful debts expense to be 2% of credit sales. What amount of doubtful debts expense will Rashford record if Allowance for doubtful debts has a credit balance of $3,000?
3. Assume that Rashford decides to estimate its doubtful debts expense based on 5% of accounts receivable. What amount of doubtful debts expense will Rashford PTY LTD record if Allowance for doubtful debts has a credit balance of $4,000
4. Referring back to the facts in question 3, except that there is a $2,000 debit balance in Allowance for doubtful debts. What amount of doubtful debts expense will Rashford record?
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