Compare Two Methods of Accounting for Uncollectible Receivables Call Systems Comparwy, a telephone service and supply company, has just completed its fourth year of operations. The direct write-off method of recording bad debt expense has been used during the entire period, Because of substantial increases in sales volume and the amount of uncollectible accounts, the company is considering changing to the allowance method. Information is requested as to the effect that an annual provision of 14 of salts would have had on the amount or bad debt expense reported for each of the past four years. It is also considered desirable to know what the balance of Allowance for Doubtful Accounts would have been at the end of each year. The following data have been obtained from the accounts: Year of Origin of Accounts Receivable Written off as Uncollectible Uncollectible Accounts Year Sales 1st 2nd 4th 3rd Written Off $1,320,000 $1,200 $1,200 2nd 1,690,000 2,850 1,350 $1.500 3rd 2,530,000 11,000 3,200 2.550 $5,250 4th 3,390,000 16,600 3.500 5,650 57,150 Required: 1st 1. Assemble the desired data. Enter a decrease in the amount of expenses a negative number and all other amounts as positive numbers Call Systems Company Bad Debt Expense Expense Actually Reported Expense Based on Estimate Increase (Decrease) in Amount of Expense Year Balance of Allowance Account End of Year 150 2nd Ath 2. Exponence during the first four years of agerations indicated that there were the collected within two years or had to be written of uncollectible Dom Previous Next