Problem #3: Accounts Receivable Presentation (8 points)

The following items were taken from the 2017 GAAP financial statements of Leone Horticultural Co.:
	In the balance sheet:	12/31/2017
	Accounts receivable, net of an allowance of $525,000	$8,852,400
	In the income statement:	2017
	Net sales	$35,722,600
	Bad debts expense	(740,000)

a. Identify the amount of each item below based on the 2017 GAAP financial statements of Leone Horticultural Co. (1 point per item = 5 points)

b.	Indicate your responses to this question by writing an X in the appropriate boxes. Leone Horticultural Co. uses the allowance method to account for bad debts under GAAP and, accordingly, recognizes bad debts expense in its GAAP income statement when:
	(1 point per item = 3 points)	YES	NO
1)	Management estimates the allowance for probable credit losses on the existing accounts
2)	Actual customer accounts are written off as uncollectible
3)	Customer accounts become past due generally when they are outstanding beyond eleven or sixteen days from invoice