Question
eBook Compare Two Methods of Accounting for Uncollectible Receivables Call Systems Company, a telephone service and supply company, has just completed its fourth year of
eBook
Compare Two Methods of Accounting for Uncollectible Receivables
Call Systems Company, 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 % of sales would have had on the amount of 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 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Year | Sales | Uncollectible Accounts Written Off | 1st | 2nd | 3rd | 4th | ||||||
1st | $1,130,000 | $1,000 | $1,000 | |||||||||
2nd | 1,620,000 | 2,750 | 1,300 | $1,450 | ||||||||
3rd | 2,730,000 | 11,900 | 3,450 | 2,750 | $5,700 | |||||||
4th | 3,290,000 | 16,100 | 3,700 | 5,450 | $6,950 |
Required:
1. Assemble the desired data. Enter a decrease in the amount of expense as a negative number and all other amounts as positive numbers.
Year | Expense Actually Reported | Expense Based on Estimate | Increase (Decrease) in Amount of Expense | Balance of Allowance Account, End of Year |
1st | $fill in the blank a2cb22f20fc4f8d_1 | $fill in the blank a2cb22f20fc4f8d_2 | $fill in the blank a2cb22f20fc4f8d_3 | $fill in the blank a2cb22f20fc4f8d_4 |
2nd | fill in the blank a2cb22f20fc4f8d_5 | fill in the blank a2cb22f20fc4f8d_6 | fill in the blank a2cb22f20fc4f8d_7 | fill in the blank a2cb22f20fc4f8d_8 |
3rd | fill in the blank a2cb22f20fc4f8d_9 | fill in the blank a2cb22f20fc4f8d_10 | fill in the blank a2cb22f20fc4f8d_11 | fill in the blank a2cb22f20fc4f8d_12 |
4th | fill in the blank a2cb22f20fc4f8d_13 | fill in the blank a2cb22f20fc4f8d_14 | fill in the blank a2cb22f20fc4f8d_15 | fill in the blank a2cb22f20fc4f8d_16 |
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