The following is a portion of the current asset section of the balance sheets of HiROE Co., at December 31, 2011 and 2010:

Required:
a. Describe how the allowance amount at December 31, 2011, was most likely determined.
b. If bad debts expense for 2011 totaled $48,000, what was the amount of accounts receivable written off during the year?
c. The December 31, 2011, Allowance account balance includes $21,000 for a past due account that is not likely to be collected. This account has not been written off. If it had been written off, what would have been the effect of the write-off on
1. Working capital at December 31, 2011?
2. Net income and ROI for the year ended December 31, 2011?
d. What do you suppose was the level of HiROE's sales in 2011, compared to 2010? Explain your answer.
e. Calculate the ratio of the Allowance for Uncollectible Accounts balance to the Accounts Receivable balance at December 31, 2010, and 2011. What factors might have caused the change in thisratio?

Transcribed Image Text:

December 31, 201 December 31, 2010 Accounts receivable, less allowance for uncolectible accounts of $54,000 and $18,000, respectively 906,000 722,000