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Here is information related to Schellhamer Company for 2010.

Total credit sales $1,519,130
Accounts receivable at December 31 855,000
Bad debts written off 48,710

(a) What amount of bad debts expense will Schellhamer Company report if it uses the direct write-off method of accounting for bad debts?

(b) Assume that Schellhamer Company decides to estimate its bad debts expense based on 3% of accounts receivable. What amount of bad debts expense will the company record if Allowance for Doubtful Accounts has a credit balance of $3,447?

(c) Assume the same facts as in the question above, except that there is a $1,796 debit balance in Allowance for Doubtful Accounts. What amount of bad debts expense will Schellhamer record?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9976889

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