On 1 July 2008, Morton Limited had accounts receivable of $53000 and an allowance for doubtful debts of $3100. During the year ended 30 June 2009, credit sales amount to $ 432 500 and cash collected from customers was $417 400. At end of the financial year, the credit manager decided that accouts totalling $1200 should written off as bad debts and the allowance for doubtful debts increased to $4200.
1. What was the estimated collectable value of accounts recivable as at 30 June 2009?
2. What was the amount of the bad debts expense for the year ended 30 June 2009?
3. What are the main reasons for using the allowance method of accouting for bad debts rather than the direct write off method?