ATel Electronics Inc s accounting data show the following balances for
ATel Electronics, Inc.’s accounting data show the following balances for 2013 and 2014:
The accountant also provided the following additional information:
1. ATel Electronics uses the perpetual inventory system and its gross margin is 40% of the sales.
2. During 2014, there was a large write off of $15,800 due to an unexpected bankruptcy of a major customer.
3. During 2014, $1,200 of the previously written-off amount was collected in full.
Requirements
1. Calculate the bad debt expense for the year ended December 31, 2014.
2. Calculate the cash collections from accounts receivable for 2014.
3. Prepare journal entries to record all the transactions for ATel in 2014.
4. What is the impact on each of Assets, Shareholders’ Equity and Net Income, when the uncollectible accounts are written off? Please identify as increase (I), decrease (D), or no effect (NE).
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