Explain the two methods used to estimate uncollectible accounts
One method analyzes the net credit sales of the current period and is referred to as the percentage of net sales method. Because revenue from the current period only is being considered, the calculation results in an estimate of the uncollectible accounts expense for that same period. This is an attempt to quantify the risk taken by making sales on account in that period.
The second method is called the accounts receivable aging method. The accounts receivable are grouped according to how long they have been open. A different percentage of uncollectibility is applied to each age group and then all results are summed to arrive at an estimate of the amount of current receivables that will not be collected. This becomes the new balance for the Allowance for Uncollectible Accounts account.
1600 ). Why should a dishonored note receivable be transferred to an individual account receivable for the debtor?
You might also like to view...
Protecting a firm's intellectual capital requires a concerted effort.
Answer the following statement true (T) or false (F)
A foreign company has offered to buy 75 units for a reduced sales price of $350 per unit. The marketing manager says the sale will not affect the company's regular sales. The sales manager says that this sale will require variable selling and administrative costs. The production manager reports that there is plenty of excess capacity to accommodate the deal without requiring any additional fixed costs. If Luna accepts the deal, how will this impact operating income? (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)
Luna Company makes special equipment used in cell towers. Each unit sells for $400. Luna produces and sells 12,600 units per year. They have provided the following income statement data:
A) Operating income will increase by $18,512.
B) Operating income will decrease by $18,512.
C) Operating income will increase by $26,250.
D) Operating income will decrease by $26,250.
Unit cost is calculated by the difference between fixed costs and variable costs
Indicate whether the statement is true or false
A city is suggesting that homeowners participate in a mandatory recycle program.Which of the following would most likely be sketched as the problem (remember that storyboards are from the customer’s perspective)?
a. overflowing landfills b. the city facility for processing the recycled items c. recycling bins placed near the curb d. overflowing trash cans and a resident not knowing what to do with a bottle that says “recycle”