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PSA7.7 Calculate bad debt amounts using different methods. LO8 The following information relates to Eason Ltd for 2019: Total credit sales $200 000 Accounts receivable at 31 December 2019 46 000 Bad debts written off 2 900 Required (a) What amount of bad debts expense will Eason Ltd report if it uses the direct write-off method of accounting for bad debts? (b) Assume that Eason 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 $1600 at 31 December 2018? (c) Assume the same facts as in part (b), except that there is a debit balance of $1150 in allowance for doubtful debts. What amount of bad debts expense will Eason Ltd record? (d) What is the weakness of the direct write-off method of reporting bad debts expense? PSA7.8 Journalise entries to record transactions related to bad debts. LO8 At 31 December 2019, the trial balance of Lexington Pty Ltd contained the following amounts before adjustment