following questions and create brief report by referring to the data in the photo attached below:

1. Your recommendations and the reasoning behind them – should you use percent of credit sales or aging of receivables? (Consider: Is the aging method the right choice for the company given the historical data? Should all the years be included in the analysis? Should you use mean or median to calculate the percentages? Are there any extreme observations that should not be included in the analysis? Do the number of customers matter in a given year? Does the balance of total receivables vary significantly and what you conclude given these differences?)

2. Based on your recommendation, calculate the amount of bad debt expense you should report for 2018. Assume 2018 beginning balance of Allowance for Uncollectible Accounts is $200,000 (credit). (Provide the analysis of the credit sales or outstanding receivables in each aging category for 2018 that led you to this number in the table above)

 

Transcribed Image Text:

Year Percent of sales on Total Outstanding account Receivables written off 2013 35,889,300.00 2014 35,536,683.00 2015 34,914,745.00 2016 27,090,239.00 2017 42,763,443.00 2018 (perdicted) 40,134,151.00 2.59% 1.75% 1.51% 2.14% 2.35% Percent of outstanding receivables written off by receivale age group 0-30 36.75% 18.84% 22.49% 32.80% 28.06% 31-60 11.87% 6.30% 5.21% 7.03% 8.60% 61-90 8.99% 7.36% 5.55% 9.32% 9.27% over 90 6.79% 4.84% 4.33% 5.97% 6.84% Year Percent of sales on Total Outstanding account Receivables written off 2013 35,889,300.00 2014 35,536,683.00 2015 34,914,745.00 2016 27,090,239.00 2017 42,763,443.00 2018 (perdicted) 40,134,151.00 2.59% 1.75% 1.51% 2.14% 2.35% Percent of outstanding receivables written off by receivale age group 0-30 36.75% 18.84% 22.49% 32.80% 28.06% 31-60 11.87% 6.30% 5.21% 7.03% 8.60% 61-90 8.99% 7.36% 5.55% 9.32% 9.27% over 90 6.79% 4.84% 4.33% 5.97% 6.84%

Answer rating: 100% (QA)

I would recommend using the percent of outstanding receivables written off by age group method to ca... View the full answer