What amount would abc show as bad debt expense

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Reference no: EM132746301

Question: ABC Corporation provides the information in the table below for the year ended 12/31/2019. Use this information to answer questions A and B in each of the two independent scenarios presented in 1 and 2 following the table.

Requirements: Answer the questions below, noting that Scenario 1 and scenario 2 are independent scenarios.

1. Assuming ABC Corporation uses the "Percentage of Credit Sales" method to estimate bad debt and that DEF expects 1% of credit sales to result in bad debts:

A) What amount would ABC show as "Bad Debt Expense" on its 2019 income statement?

B) What amount would ABC show as "Accounts Receivable, Net" on its 2019 balance sheet?

2. Assuming ABC Corporation uses the "Aging of Accounts Receivable" method to estimate bad debt and that DEF estimates probable bad debt loss rates of: 1% of not yet due accounts, 10% of 1-90 days past due accounts and 20% of 91+ days past due accounts:

A) What amount would ABC show as "Bad Debt Expense" on its 2019 income statement?

B) What amount would ABC show as "Accounts Receivable, Net" on its 2019 balance sheet?

Reference no: EM132746301

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