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Year Sales 1st $1,100,000 2nd 1,670,000 3rd 2,660,000 4th 3,130,000 Required: Written Off Year $1,000 2,850 11,550 15,350 Expense Actually Reported 1st. $1,000 1,350 3,350 2nd Expense Based on Estimate $1,500 2,650 3,550. 3rd $5,550 5,200 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 4th $6,600 Increase (Decrease) in Amount of Balance of Allowance Account, End of Expense Year

Year Sales 1st $1,100,000 2nd 1,670,000 3rd 2,660,000 4th 3,130,000 Required: Written Off Year $1,000 2,850 11,550 15,350 Expense Actually Reported 1st. $1,000 1,350 3,350 2nd Expense Based on Estimate $1,500 2,650 3,550. 3rd $5,550 5,200 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 4th $6,600 Increase (Decrease) in Amount of Balance of Allowance Account, End of Expense Year

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Year Sales 1st $1,100,000 2nd 1,670,000 3rd 2,660,000 4th 3,130,000 Required: Year Written Off 1st 2nd 3rd 4th $1,000 2,850 11,550 15,350 Expense Actually Reported 1st $1,000 1,350 3,350 2nd Expense Based on Estimate $1,500 2,650 3,550 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 3rd $5,550 5,200 CDN Increase (Decrease) in Amount of Expense 4th $6,600 Balance of Allowance Account, End of Year 2. Experience during the first four years of operations indicated that the receivables were either collected within two years or had to be written off as uncollectible. Does the estimate of %% of sales appear to be reasonably close to the actual experience with uncollectible accounts originating during the first two years?
Transcribed Image Text:Year Sales 1st $1,100,000 2nd 1,670,000 3rd 2,660,000 4th 3,130,000 Required: Year Written Off 1st 2nd 3rd 4th $1,000 2,850 11,550 15,350 Expense Actually Reported 1st $1,000 1,350 3,350 2nd Expense Based on Estimate $1,500 2,650 3,550 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 3rd $5,550 5,200 CDN Increase (Decrease) in Amount of Expense 4th $6,600 Balance of Allowance Account, End of Year 2. Experience during the first four years of operations indicated that the receivables were either collected within two years or had to be written off as uncollectible. Does the estimate of %% of sales appear to be reasonably close to the actual experience with uncollectible accounts originating during the first two years?
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 12% 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 1st $1,100,000 2nd 1,670,000 3rd 2,660,000 4th 3,130,000 Required: Year 1st 2nd Uncollectible Accounts Written Off Expense Actually Reported 00 $1,000 2,850 11,550 15,350 1st $1,000 1,350 3,350 2nd Expense Based on Estimate $1,500 2,650 3,550 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 3rd $5,550 5,200 4th Increase (Decrease) in Amount of Expense $6,600 Balance of Allowance Account, End of Year
Transcribed Image Text: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 12% 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 1st $1,100,000 2nd 1,670,000 3rd 2,660,000 4th 3,130,000 Required: Year 1st 2nd Uncollectible Accounts Written Off Expense Actually Reported 00 $1,000 2,850 11,550 15,350 1st $1,000 1,350 3,350 2nd Expense Based on Estimate $1,500 2,650 3,550 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 3rd $5,550 5,200 4th Increase (Decrease) in Amount of Expense $6,600 Balance of Allowance Account, End of Year
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