As the accountant for Pure-Air Distributing, you attend a sales managers’ meeting devoted to a discussion of credit policies. At the meeting, you report that bad debts expense is estimated to be $59,000 and accounts receivable at year-end amount to $1,750,000 less a $43,000 allowance for doubtful accounts. Sid Omar, a sales manager, expresses confusion over why bad debts expense and the allowance for doubtful accounts are different amounts. Write a one-page memorandum to him explaining why a difference in bad debts expense and the allowance for doubtful accounts is not unusual. The company estimates bad debts expense as 2% of sales.
Answer to relevant QuestionsAccess eBay’s, February 20, 2009, filing of its 10-K report for the year ended December 31, 2008, at www.sec.gov. Required 1. What is the amount of eBay’s net accounts receivable at December 31, 2008, and at December 31, ...Refer to the information in QS. Compute the year 2011 depreciation using the units of production method. In QS, On January 2, 2011, the Deadra Band acquires sound equipment for concert performances at a cost of $32,500. The ...Camden Company reports the following ($ 000s): net sales of $14,880 for 2011 and $13,990 for 2010; end-of-year total assets of $15,869 for 2011 and $17,819 for 2010. Compute its total asset turnover for 2011, and assess its ...Refer to the information in Exercise. Compute depreciation expense for year 2011 assuming the company uses the double-declining-balance method. In QS, On April 1, 2010, Bricen Backhoe Co. purchases a trencher for $253,000. ...Galvano Gallery purchases the copyright on an oil painting for $432,000 on January 1, 2011. The copy right legally protects its owner for 19 more years. However, the company plans to market and sell prints of the original ...
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