The following information is from the 2016 records of Armadillo Camera Shop:
$$\begin{array} { | l | r | }
\hline \text { Accounts receivable, 31 December 2016 } & \$ 20000 \text { (debit) } \
\hline \text { Net credit sales for 2016 } & 95000 \
\hline \text { Accounts written off as uncollectable during 2016 } & 7000 \
\hline \text { Cash sales during 2016 } & 27000 \
\hline
\end{array}$$
Bad debts expense is determined by the direct write-off method.Which of the following will be the amount of Bad debts expense?

Question

The following information is from the 2016 records of Armadillo Camera Shop:
$$\begin{array} { | l | r | } 
\hline \text { Accounts receivable, 31 December 2016 } & \$ 20000 \text { (debit) } \
\hline \text { Net credit sales for 2016 } & 95000 \
\hline \text { Accounts written off as uncollectable during 2016 } & 7000 \
\hline \text { Cash sales during 2016 } & 27000 \
\hline
\end{array}$$
Bad debts expense is determined by the direct write-off method.Which of the following will be the amount of Bad debts expense?

Quizplus · Accepted Answer

The direct write-off method records bad debts expense as the amount of accounts written off as uncollectable, which is $7,000.

The Following Information Is from the 2016 Records of Armadillo