Question: Part 1: Receivables Aging A heavy duty trucks parts re-manufacturing company has hired you as a c...

Part 1: Receivables Aging

A heavy duty trucks parts re-manufacturing company has hired you as a consultant to review their current accounting procedures and to provide them with a report addressing changes that you feel need to be made for them to improve their internal controls, and the accounting and reporting processes.

The company president does not understand the recommendations that you have offered to improve the accounting and reporting of uncollectible accounts. The company currently uses the direct write-off method and you have suggested that they use the accounts receivable aging method to estimate their future bad debts. The president stated:

"In my opinion, financial statements should be based on what actually took place rather than what we think will happen in the future. In other words, I think they should be objective rather than subjective. After all, our bad debt expense has been almost the same amount for each of the past three years and is thus very predictable. By using the direct write-off method, we are reporting exactly what took place. Why do we need to change?"

Draft a 1 page memorandum in Word responding to the concerns and objections of the company president, and in support of your recommendation for the company to adopt the receivable aging method going forward.

Additional Requirements

Written communication: Your memorandum should be clear, well-organized, and support a central idea, with no technical writing errors, as expected of a business professional.

References: References and citations should be formatted using current APA guidelines