Chapter 5, Problem 67E

To determine

(a)

Credit Sales Method:

The method named percentage of credit sales method is the method in which the bad debts are computed on the basis of percentage of sales.

The bad debt expense for the year.

To determine

(b)

Credit Sales Method:

The method named percentage of credit sales method is the method in which the bad debts are computed on the basis of percentage of sales.

Accounts Receivable Balance:

The accounts receivable balance is the outstanding balance in the ledger accounts of the business from whom the money is due for receivable.

Allowance Method:

It is a method of recognizing the bad debt before its actual occurrence i.e. on estimation basis. In this method, the bad debt is recorded in the books at the time of sale of the goods on making an estimate about the bad debt as per the past records and recognized in a separate account named allowance account.

The ending balances in accounts receivable and allowance for doubtful accounts.