The following information relates to Benson Ltd for 2016. 

Required

(a) What amount of bad debts expense will Benson Ltd report if it uses the direct write-off method of accounting for bad debts?

(b) Assume that Benson Ltd decides to estimate its bad debts expense based on 5% of accounts receivable. What amount of bad debts expense will the business record if it has an Allowance for Doubtful Debts credit balance of $2 000 at 31 December 2015?

(c) Assume the same facts as in part (b), except that there is a debit balance of $1 438 in Allowance for Doubtful Debts. What amount of bad debts expense will Benson Ltd record?

(d) What is the weakness of the direct write-off method of reporting bad debts expense?

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Total credit sales Accounts receivable at 31 December 2016 Bad debts written off $250 000 57500 3625