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  • Information Related To Miracle Company For 2015 Is Summarized Below

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    Miracle Company reported $1,000,000 in total credit sales and $369,000 in accounts receivable for 2015. They wrote off $22,150 in bad debts. Using the direct write-off method, Miracle Company would report $22,150 in bad debt expense. If they estimated 2% of credit sales for bad debts and had a $3,000 credit in allowance, they would report $20,000 in bad debt expense. Estimating 5% of accounts receivable with a $4,000 credit in allowance, they would report $18,450 in bad debt expense.

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    Miracle Company reported $1,000,000 in total credit sales and $369,000 in accounts receivable for 2015. They wrote off $22,150 in bad debts. Using the direct write-off method, Miracle Company would report $22,150 in bad debt expense. If they estimated 2% of credit sales for bad debts and had a $3,000 credit in allowance, they would report $20,000 in bad debt expense. Estimating 5% of accounts receivable with a $4,000 credit in allowance, they would report $18,450 in bad debt expense.

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    49 views1 page

    Information Related To Miracle Company For 2015 Is Summarized Below

    Uploaded by

    trilocksp Singh
    Miracle Company reported $1,000,000 in total credit sales and $369,000 in accounts receivable for 2015. They wrote off $22,150 in bad debts. Using the direct write-off method, Miracle Company would report $22,150 in bad debt expense. If they estimated 2% of credit sales for bad debts and had a $3,000 credit in allowance, they would report $20,000 in bad debt expense. Estimating 5% of accounts receivable with a $4,000 credit in allowance, they would report $18,450 in bad debt expense.

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    © All Rights Reserved
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    Information related to Miracle Company for 2015 is

    summarized below
    Information related to Miracle Company for 2015 is summarized below.Total credit sales
    .............. $1,000,000Accounts receivable at December 31 ...... 369,000Bad debts written off
    ............ 22,150Instructions(a) What amount of bad debt expense will Miracle Company report if
    it uses the direct write-off method of accounting for bad debts?(b) Assume that Miracle
    Company decides to estimate its bad debt expense to be 2% of credit sales. What amount of
    bad debt expense will Miracle record if Allowance for Doubtful Accounts has a credit balance of
    $3,000?(c) Assume that Miracle Company decides to estimate its bad debt expense based on
    5% of accounts receivable. What amount of bad debt expense will Miracle Company record if
    Allowance for Doubtful Accounts has a credit balance of $4,000?(d) Assume the same facts as
    in (c), except that there is a $2,000 debit balance in Allowance for Doubtful Accounts. What
    amount of bad debt expense will Miracle record?(e) What is the weakness of the direct write-off
    method of reporting bad debt expense?View Solution:
    Information related to Miracle Company for 2015 is summarized below
    SOLUTION-- http://solutiondone.online/downloads/information-related-to-miracle-company-
    for-2015-is-summarized-below/

    Unlock answers here solutiondone.online


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