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Return 18 A/R, Allowance and BDE problem setup Use the following information to answer questions 16 to 19: Part 3 of 4 Happy Lawn Company
Return 18 A/R, Allowance and BDE problem setup Use the following information to answer questions 16 to 19: Part 3 of 4 Happy Lawn Company started a lawn services business on January 1, 20X1 (so all account balances were zero on January 1, 20X1). It sends invoices to its customers for lawn maintenance services at the end of each month, and expects the customer to pay within 30 days. of these sales were made on credit. During 20X1, cash collected from its customers totaled $750,000 for services rendered during the year. At the end of 20X1, the Accounts Receivable for Happy Lawn had a balance of $60,000. After all write-offs but before the year-end adjusting entry, the Allowance for Doubtful Accounts had a debit balance of $4,000. 18. Rusd 16. BDE - % credit sales Assume that Happy Lawn uses the percentage of credit sales method to directly calculate the bad debt expense) instead of the aging method, and it is estimated that it will not collect 1% of the total credit sales. Required: Under this assumption what is Happy Lawn's 20X1 Bad Debt Expense? 19. % credit sales vs. aging - impact If Happy Lawn had used the percentage of credit sales method (to directly calculate the bad debt expense) instead of the aging method (to calculate the year-end balance in the allowance for doubtful accounts), and it estimated that it will not collect 1% of total credit sales, which of the following is true? Multiple Choice "Accounts receivable, net of allowance" as of December 31, 20X1 would have changed. The amount of receivables written off during 20X1 would have changed. The amount of cash owed by customers for credit sales during 20X1 would have changed. All of the above are true
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