STIVIC Vratio for the year 2012 P9-2B Information related to Gustavo Company for 2012 is summarized below. Total credit sales Accounts receivable at December 31 Bad debts written off $1,100,000 369,000 22,150 Instructions (a) What amount of bad debts expense will Gustavo Company report if it uses the direct write-off method of accounting for bad debts? (b) Assume that Gustavo Company decides to estimate its bad debts expense to be 2% of credit sales. What amount of bad debts expense will Gustavo record if Allowance for Doubtful Accounts has a credit balance of $3,000? (C) Assume that Gustavo Company decides to estimate its bad debts expense based on 6% of accounts receivable. What amount of bad debts expense will Gustavo Company record if Allowance for Doubtful Accounts has a credit balance of $4,000? (d) Assume the same facts as in (c), except that there is a $2,000 debit balance in Allowance for Doubtful Accounts. What amount of bad debts expense will Gustavo record? What is the weakness of the direct write-off method of reporting bad debts expense