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A company that uses the direct write-off method records the bad debt: a.   as a percentage...

A company that uses the direct write-off method records the bad debt:

a.   as a percentage of net credit sales during the year

b.   as an amount that is based on the aging of accounts receivable

c.   as an amount that is based on the aging of accounts receivable after considering the current balance in the allowance for doubtful accounts account.

d.   as the receivable is deemed worthless

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Answer #1

d.as the receivable is deemed worthless.

When a company uses the direct write off method, the bad debts are written off as and when they occur.

Bad debt is recorded as a percentage of net credit sales during the year if it follows percentage of credit sales method.

Bad debt would be recorded as an amount that is based on the aging of accounts receivable after considering the current balance in the allowance for doubtful accounts account, it follows the aginig of accounts receivable method.

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