McLaughlin Corporation uses the allowance method to account for bad debts. At the end of the company's
Question:
Account Receivable ........... $ 10,850,000
Less: Allowance for uncollectible Accounts ... (450,000)
Accounts receivable, net ........ $ 10,400,000
In 2012, it was determined that $1,825,000 of year-end 2011 receivables had to be written off as uncollectible. This was due in part to the fact that Hughes Corporation, a long-standing customer that had always paid its bills, unexpectedly declared bankruptcy in 2012. Hughes owed McLaughlin $1,400,000. At the end of 2011, none of the Hughes receivable was considered uncollectible.
Required:
Describe the appropriate accounting treatment and required disclosures for McLaughlin's underestimation of bad debts at the end of 2011.
Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Related Book For
Intermediate Accounting
ISBN: 978-0077400163
6th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
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