Schmidt Company received a letter from Deborah Stine, a customer. Deborah had purchased $325 worth of clothing from Schmidt on credit. She has made two payments of $50 each. She has missed the last two payments, and has received a collection letter from Schmidt. Her total debt presently, with interest and late fees, is $251.13.
Deborah sent a letter to Schmidt in which she asked for her debt to be forgiven. She said she had heard that companies make allowances for accounts they are doubtful about collecting, and that Schmidt certainly should have been doubtful about her-that as a college student she had changed her major three times. She also said that she could not enjoy a high quality of life when making such high payments, but that she didn't want to be embarrassed by bill collectors, either. She especially didn't want her parents to find out that she had not paid her debts. Having Schmidt write off her account seemed to her the best solution in the circumstances. She added that the clothes she bought at Schmidt were among the best she had ever owned, and that she "told everybody" that Schmidt was definitely the best place to get clothes.
Required:
You are the accounting manager for Schmidt. Write a short letter to Deborah explaining why her debt cannot be written off.

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The Answer of Schmidt Company received a letter from Deborah Stine, a customer. Deborah had purchased $325 worth of clothing from Schmidt on credit. She has made two payments of $50 each. She has missed the last two payments, and has received a collection letter from Schmidt. Her total debt presently, with interest and late fees, is $251.13.
Deborah sent a letter to Schmidt in which she asked for her debt to be forgiven. She said she had heard that companies make allowances for accounts they are doubtful about collecting, and that Schmidt certainly should have been doubtful about her-that as a college student she had changed her major three times. She also said that she could not enjoy a high quality of life when making such high payments, but that she didn't want to be embarrassed by bill collectors, either. She especially didn't want her parents to find out that she had not paid her debts. Having Schmidt write off her account seemed to her the best solution in the circumstances. She added that the clothes she bought at Schmidt were among the best she had ever owned, and that she "told everybody" that Schmidt was definitely the best place to get clothes.
Required:
You are the accounting manager for Schmidt. Write a short letter to Deborah explaining why her debt cannot be written off.

Schmidt Company Received a Letter from Deborah Stine, a Customer