Information related to Hermesch Company for 2011 is summarized below.
Total credit sales $2,200,000
Accounts receivable at December 31 825,000
Bad debts written off 33,000
What amount of bad debts expense will Hermesch Company report if it uses the direct writeoff method of accounting for bad debts?
The direct write-off method of accounting for bad debts recognizes bad debts as an expense when they are actually written off.
Based on the given information, the bad debts written off amount for the year 2011 is $33,000.
Therefore, if Hermesch Company uses the direct write-off method of accounting for bad debts, it would report a bad debts expense of $33,000.
To calculate the bad debts expense using the direct write-off method, we need to determine the exact amount of bad debts charged off during the year. From the information provided:
Total credit sales = $2,200,000
Bad debts written off = $33,000
Therefore, the bad debts expense for the direct write-off method can be calculated as the amount of bad debts written off:
Bad debts expense (direct write-off method) = Bad debts written off = $33,000
So, Hermesch Company will report a bad debts expense of $33,000 if it uses the direct write-off method of accounting for bad debts.