Allowance for Doubtful Accounts credit Assignment | College Homework Help

P8-2A Information related to Hamilton plc for 2017 is summarized below. Total credit sales £2,500,000 Accounts receivable at December 31 970,000 Bad debts written off 66,000 Instructions (a) What amount of bad debt expense will Hamilton report if it uses the direct write-off method of accounting for bad debts? (b) Assume that Hamilton estimates its bad debt expense to be 3% of credit sales. What amount of bad debt expense will Hamilton record if it has an Allowance for Doubtful Accounts credit balance of £4,000? (c) Assume that Hamilton estimates its bad debt expense based on 7% of accounts receiv- able. What amount of bad debt expense will Hamilton record if it has an Allowance for Doubtful Accounts credit balance of £3,000? (d) Assume the same facts as in (c), except that there is a £3,000 debit balance in Allow- ance for Doubtful Accounts. What amount of bad debt expense will Hamilton record? (e) – What is the weakness of the direct write-off method of reporting bad debt expense?