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Compute the bad debts expense

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Reference no: EM132910272

Problem - Estimating doubtful accounts - The records of Ship Co. show the following information:

Accounts receivable, Jan. 1 180,000

Allowance for bad debts, Jan. 1 (Cr.) 12,600

Sales on account 900,000

Sales returns on credit sales 90,000

Write-offs 15,800

Recoveries 2,600

Collections, excluding recoveries 781,000

Requirements - Compute for the (1) bad debts expense, (2) ending balance of allowance for bad debts, and (3) carrying amount of accounts receivable on Dec. 31 under each of the following scenarios:

a. Percentage of net credit sales (2%)

b. Percentage of ending receivable (8%)

Reference no: EM132910272

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