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 ½% 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 $1,220,000   $1,100   $1,100               2nd 1,890,000   3,200   1,500   $1,700           3rd 2,580,000   11,200   3,250   2,600   $5,350       4th 3,520,000   17,250       3,950   5,850   $7,450   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. Call Systems Company Bad Debt Expense   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 54ae9d096f88055_1 $fill in the blank 54ae9d096f88055_2 $fill in the blank 54ae9d096f88055_3 $fill in the blank 54ae9d096f88055_4 2nd fill in the blank 54ae9d096f88055_5 fill in the blank 54ae9d096f88055_6 fill in the blank 54ae9d096f88055_7 fill in the blank 54ae9d096f88055_8 3rd fill in the blank 54ae9d096f88055_9 fill in the blank 54ae9d096f88055_10 fill in the blank 54ae9d096f88055_11 fill in the blank 54ae9d096f88055_12 4th fill in the blank 54ae9d096f88055_13 fill in the blank 54ae9d096f88055_14 fill in the blank 54ae9d096f88055_15 fill in the blank 54ae9d096f88055_16

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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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 ½% 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 $1,220,000   $1,100   $1,100              
2nd 1,890,000   3,200   1,500   $1,700          
3rd 2,580,000   11,200   3,250   2,600   $5,350      
4th 3,520,000   17,250       3,950   5,850   $7,450  

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.

Call Systems Company
Bad Debt Expense
 
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 54ae9d096f88055_1 $fill in the blank 54ae9d096f88055_2 $fill in the blank 54ae9d096f88055_3 $fill in the blank 54ae9d096f88055_4
2nd fill in the blank 54ae9d096f88055_5 fill in the blank 54ae9d096f88055_6 fill in the blank 54ae9d096f88055_7 fill in the blank 54ae9d096f88055_8
3rd fill in the blank 54ae9d096f88055_9 fill in the blank 54ae9d096f88055_10 fill in the blank 54ae9d096f88055_11 fill in the blank 54ae9d096f88055_12
4th fill in the blank 54ae9d096f88055_13 fill in the blank 54ae9d096f88055_14 fill in the blank 54ae9d096f88055_15

fill in the blank 54ae9d096f88055_16

 

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