Question

Here is information related to Cullumber Company for 2022. $1,359,000 Total credit sales Accounts receivable at December 31 679,500 Bad debts written off 40,100 (a) What amount of bad debt expense will Cullumber Company report if it uses the direct write-off method of accounting for bad debts? $ Bad debts expense (b) Assume that Cullumber Company uses the percentage-of-receivables basis to record bad debt expense and concludes that 4 % of accounts receivable wi become uncollectible. What amount of bad debt expense will the company record if Allowance for Doubtful Accounts has a credit balance of $3,000? Bad debts expense 5 (c) Assume the same facts as in (b), except that there is a $1,100 debit balance in Allowance for Doubtful Accounts. What amount of bad debt expense will Cullumber record? $ Bad debts expense

Answer 1

a) Bad debt expense = 40100

b) Bad debt expense = (679500*4%-3000) = 24180

c) bad debt expense = (679500*4%+1100) = 28280