Critically Analyzing Information about an Asset Account 12. As the auditor, you are provided the following information regarding XYZ Corporation's Accounts Receivables as of December 31, 2020. From the General Ledger Accounts Receivable Allowance for Doubtful Accounts Balance as of December 31, 2020 Balance as of December 31, 2019 $282,143 debit 201,806 debit $ 6,400 debit 15,000 credit Current Over 30 days Total From the detailed Accounts Receivable Subsidiary Ledger Over 90 days past due Over 120 days past due past due Dollars at 12/31/2020 $140,000 $30,000 $40,000 $70,643 $280,643 2020 % in each category 48.9% 10.7% 14.3% 25.1% 100% 2019 % in each category 60% 15% 15% 10% 100% 2018 % in each category 61% 21% 13% 5% 100% Sales, write-off's and bad debt expense for the last three years per the General Ledger Year Sales Write-Offs Bad debt expense 2020 $1,600,000 $25,400 2,000 2019 1,800,000 42,000 37,000 2018 2,000,000 40,000 45,000 Additional Information: The accounts receivable subsidiary ledger does not match to the general ledger because the general ledger includes an amount advanced to an employee for airline tickets associated with attending a sales trade show. The employee has since quit the firm and management believes that the advanced amount should now be shown as an expense. One customer makes up $23,000 of the balance in the over 120 day past due category. In fact, this customer's balance is 300 days past due. There are rumors that this customer is filing for bankruptcy and management believes that the amount recoverable will be zero. In the past, management has found that 30% of amounts past 120 days due are generally uncollectible. The historical average of bad debts as a percent of sales for the last 10 years has been 2.75%. Required: Assume that any discrepancies found are material to the financial statements. Please answer the following: Do you believe that the Accounts Receivable balance should be increased, decreased or left the same Do you believe the allowance for doubtful accounts should be increased, decreased or left the same Do you believe that the bad debt expense account should be increased, decreased or left the same? Do you believe that the selling expense account should be increased, decreased or left the same? Do you believe that long-term assets should be increased, decreased of left the same? Prepare any adjusting journal entries you feel are appropriate to bring the accounts discussed above into alignment with fair statement. Critically Analyzing Information about an Asset Account 12. As the auditor, you are provided the following information regarding XYZ Corporation's Accounts Receivables as of December 31, 2020. From the General Ledger Accounts Receivable Allowance for Doubtful Accounts Balance as of December 31, 2020 Balance as of December 31, 2019 $282,143 debit 201,806 debit $ 6,400 debit 15,000 credit Current Over 30 days Total From the detailed Accounts Receivable Subsidiary Ledger Over 90 days past due Over 120 days past due past due Dollars at 12/31/2020 $140,000 $30,000 $40,000 $70,643 $280,643 2020 % in each category 48.9% 10.7% 14.3% 25.1% 100% 2019 % in each category 60% 15% 15% 10% 100% 2018 % in each category 61% 21% 13% 5% 100% Sales, write-off's and bad debt expense for the last three years per the General Ledger Year Sales Write-Offs Bad debt expense 2020 $1,600,000 $25,400 2,000 2019 1,800,000 42,000 37,000 2018 2,000,000 40,000 45,000 Additional Information: The accounts receivable subsidiary ledger does not match to the general ledger because the general ledger includes an amount advanced to an employee for airline tickets associated with attending a sales trade show. The employee has since quit the firm and management believes that the advanced amount should now be shown as an expense. One customer makes up $23,000 of the balance in the over 120 day past due category. In fact, this customer's balance is 300 days past due. There are rumors that this customer is filing for bankruptcy and management believes that the amount recoverable will be zero. In the past, management has found that 30% of amounts past 120 days due are generally uncollectible. The historical average of bad debts as a percent of sales for the last 10 years has been 2.75%. Required: Assume that any discrepancies found are material to the financial statements. Please answer the following: Do you believe that the Accounts Receivable balance should be increased, decreased or left the same Do you believe the allowance for doubtful accounts should be increased, decreased or left the same Do you believe that the bad debt expense account should be increased, decreased or left the same? Do you believe that the selling expense account should be increased, decreased or left the same? Do you believe that long-term assets should be increased, decreased of left the same? Prepare any adjusting journal entries you feel are appropriate to bring the accounts discussed above into alignment with fair statement