Total credit sales $2,211,190
Accounts receivable at December 31 828,320
Bad debts written off 33,207
1. Assume that Jems Company estimates its bad debts expense to be 2% of credit sales. What amount of bad debts expense will Jems record if it has an Allowance for Doubtful Accounts credit balance of $7,111?
.02 * $2,211,190 = 44223.8
then 44223.8 – 7111 = 37112.8 is this the correct?
2. Assume that Jems Company estimates its bad debts expense based on 7% of accounts receivable. What amount of bad debts expense will Jems record if it has an Allowance for Doubtful Accounts credit balance of $3,131?
.07 * 2,211,190 = 154783.3
then 154783.3 – 3131 = 151652.3 is this correct?
3. Assume the same facts as in previous question, except that there is a $3,131 debit balance in Allowance for Doubtful Accounts. What amount of bad debts expense will Jems record?
.07 * 2,211,190 = 154783.3
then 154783.3 + 3131 = 157914.3 is this correct?
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