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Problem 1 Anna Hernandez is an accountant at Axis Corporation, a specialty retailer. She was investigating why the incidence of bad debts in 2 0
Problem Anna Hernandez is an accountant at Axis Corporation, a specialty retailer. She was investigating why the incidence of bad debts in had come in at a higher rate than that provided for in the bad debt allowance at the start of the year. She had commissioned a study of writeoff by receivablesage categories using monthly data over The results of this study along with details of opening and closing receivables provided below confirmed her fears. Actual bad debts writeoffs during were higher for all but one of the age categories. Anna decided that the closing allowance would need to reflect the exact incidence of bad debts for each aging category that the monthly analysis had revealed. Sales for was $ thousand. a Determine the closing bad debt allowance for b Using the allowance created in above, show Taccounts of Gross Receivables and Allowance for Bad Debts during Note total bad debt writeoff during was $ thousand. c Determine the bad debt expense in $ and as of sale for d Show how Accounts Receivables amounts will be shown on the balance sheet during and e Comment on the differences between the and receivables, with particular emphasis on whether receivables quality had deteriorated in
Problem
Anna Hernandez is an accountant at Axis Corporation, a specialty retailer. She was investigating
why the incidence of bad debts in had come in at a higher rate than that provided for in
the bad debt allowance at the start of the year. She had commissioned a study of writeoff by
receivablesage categories using monthly data over The results of this study along with
details of opening and closing receivables provided below confirmed her fears. Actual bad
debts writeoffs during were higher for all but one of the age categories.
Anna decided that the closing allowance would need to reflect the exact incidence of bad
debts for each aging category that the monthly analysis had revealed. Sales for was $
thousand.
a Determine the closing bad debt allowance for
b Using the allowance created in above, show Taccounts of Gross Receivables and
Allowance for Bad Debts during Note total bad debt writeoff during was $
thousand.
c Determine the bad debt expense in $ and as of sale for
d Show how Accounts Receivables amounts will be shown on the balance sheet during
and
e Comment on the differences between the and receivables, with particular
emphasis on whether receivables quality had deteriorated in
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