Problem 8-4 Here is information related to Freeman Company for 2014 Total credit

Question

Problem 8-4 Here is information related to Freeman Company for 2014 Total credit sales Accounts receivable at December 31 Bad debts written off $1,500,000 840,000 37,000 What amount of bad debt expense will Freeman Company report if it uses the direct write-off method of accounting for bad debts? Bad debts expense s LINK TO TEXT VIDEO: SIMILAR PROBLEM Assume that Freeman Company decides to estimate its bad debt expense based on 4% of accounts receivable. what amount of bad debt expense will the company record if Allowance for Doubtful Accounts has a credit balance of $3,000? Bad debts expense $ LINK TO TEXT VIDEO: SIMILAR PROBLEM Assume the same facts as in part (b), except that there is a $1,000 debit balance in Allowance for Doubtful Accounts. What amount of bad debt expense will Freeman record? Bad debts expense

Explanation / Answer

(a) Bad debts expense = $37,000

(b) Bad debts expense = ($840,000 × 4%) - $3,000 = $$30,600

(c) Bad debts expense = ($840,000 × 4%) + $1,000 = $34,600

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