prediction of doubtful debts,
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Tommy lawyers has decided to apply the allowance method to account for its bad debts.
They also apply the percentage of credit sales method set at 6%.
At the end of their first month of operations, March 2020, they record the following transaction:
31* March 2020
Debit Bad Debts Expense
$7,200
Credit Allowance for Doubtful Debts
$7,200
During April 2020, their total write-offs were:
Debit Allowance for Doubtful Debts $13,300
Credit Accounts Receivable
$13,300
The prediction percentage, used for April's prediction of doubtful debts, should be:
Select one:
a. less the 6%.
O b. greater than 6%.
O c. equal to 6%
O d. 0%.
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