Information related to Izmir A.Ş. for 2017 is summarized below. t920,000 369,000 23,400 V. Total credit sales Accounts receivable at December 31 Bad debts written off Instructions (a) What amount of bad debt expense will Izmir report if it uses the direct write-off method of accounting for bad debts? (b) Assume that Izmir decides to estimate its bad debt expense to be 3% of credit sales. What amount of bad debt expense will Izmir record if Allowance for Doubtful Accounts has a credit balance of t3,000? (c) Assume that Izmir decides to estimate its bad debt expense based on 7% of accounts receivable. What amount of bad debt expense will Izmir record if Allowance for Doubt- ful Accounts has a credit balance of t4,000? (d) Assume the same facts as in (c), except that there is a t2,000 debit balance in Allow- ance for Doubtful Accounts. What amount of bad debt expense will Izmir record?
Information related to Izmir A.Ş. for 2017 is summarized below. t920,000 369,000 23,400 V. Total credit sales Accounts receivable at December 31 Bad debts written off Instructions (a) What amount of bad debt expense will Izmir report if it uses the direct write-off method of accounting for bad debts? (b) Assume that Izmir decides to estimate its bad debt expense to be 3% of credit sales. What amount of bad debt expense will Izmir record if Allowance for Doubtful Accounts has a credit balance of t3,000? (c) Assume that Izmir decides to estimate its bad debt expense based on 7% of accounts receivable. What amount of bad debt expense will Izmir record if Allowance for Doubt- ful Accounts has a credit balance of t4,000? (d) Assume the same facts as in (c), except that there is a t2,000 debit balance in Allow- ance for Doubtful Accounts. What amount of bad debt expense will Izmir record?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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Transcribed Image Text:V.
Information related to Izmir A.Ş. for 2017 is summarized below.
Total credit sales
+920,000
369,000
23,400
Accounts receivable at December 31
Bad debts written off
Instructions
(a) What amount of bad debt expense will Izmir report if it uses the direct write-off
method of accounting for bad debts?
(b) Assume that Izmir decides to estimate its bad debt expense to be 3% of credit sales.
What amount of bad debt expense will Izmir record if Allowance for Doubtful Accounts
has a credit balance of t3,000?
(c) Assume that Izmir decides to estimate its bad debt expense based on 7% of accounts
receivable. What amount of bad debt expense will Izmir record if Allowance for Doubt-
ful Accounts has a credit balance of t4,000?
(d) Assume the same facts as in (c), except that there is a t2,000 debit balance in Allow-
ance for Doubtful Accounts. What amount of bad debt expense will Izmir record?
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