Suppose a manger is interested in reporting the highest cumulative income from the project at any...
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Suppose a manger is interested in reporting the highest cumulative income from the project at any given point in time. Which method (if any) should the manager adopt? Is there any method(s) the manager should never adopt? What if the manager cares only about the overall income from the completed project? Question 2: Hook the Crook At a January 2019 meeting, the president of Hook the Crook Company announced the credit evaluation department was being disbanded because it had restricted the company's growth. The sales staff would now make credit decisions. By the end of the year, Hook the Crook had generated significant gains in sales and the president was very pleased. The accounting department provided the following data: Sales (all are on credit) Cost Of Goods Sold Accounts Receivable Allowance for bad debt, 12/31 2019 $24,000,000 21,000,000 13,000,000 ? The $13,000,000 receivables balance was aged as follows: Age of receivable Under 31 days 31-60 days 61-90 days Over 90 days Amount $4,000,000 $3,500,000 $3,000,000 $2,500,000 2018 $8,000,000 7,000,000 1,000,000 30,000 Percentage expected to be collected 95% 90% 75% 50% $30,000 were written off during 2019 and the rest of the balance of accounts receivable from December 31, 2018 was collected. No accounts were written off for 2019 credit sales. Required: a. Estimate the amount of uncollectible accounts as of December 31, 2019 and find the bad debt expense for 2019. Provide the journal entry for recording the bad debt expense. b. Why should a company record a bad debt expense during the current year, when it is going to realize a specific account is uncollectible only in the future (say next year)? Suppose a manger is interested in reporting the highest cumulative income from the project at any given point in time. Which method (if any) should the manager adopt? Is there any method(s) the manager should never adopt? What if the manager cares only about the overall income from the completed project? Question 2: Hook the Crook At a January 2019 meeting, the president of Hook the Crook Company announced the credit evaluation department was being disbanded because it had restricted the company's growth. The sales staff would now make credit decisions. By the end of the year, Hook the Crook had generated significant gains in sales and the president was very pleased. The accounting department provided the following data: Sales (all are on credit) Cost Of Goods Sold Accounts Receivable Allowance for bad debt, 12/31 2019 $24,000,000 21,000,000 13,000,000 ? The $13,000,000 receivables balance was aged as follows: Age of receivable Under 31 days 31-60 days 61-90 days Over 90 days Amount $4,000,000 $3,500,000 $3,000,000 $2,500,000 2018 $8,000,000 7,000,000 1,000,000 30,000 Percentage expected to be collected 95% 90% 75% 50% $30,000 were written off during 2019 and the rest of the balance of accounts receivable from December 31, 2018 was collected. No accounts were written off for 2019 credit sales. Required: a. Estimate the amount of uncollectible accounts as of December 31, 2019 and find the bad debt expense for 2019. Provide the journal entry for recording the bad debt expense. b. Why should a company record a bad debt expense during the current year, when it is going to realize a specific account is uncollectible only in the future (say next year)?
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a Statement showing the computation of Bad debt expenses Uncollectable amount Age of Receivable Amount of uncollectable amount Uncollectable amount Un... View the full answer
Related Book For
Managerial accounting
ISBN: 978-0471467854
1st edition
Authors: ramji balakrishnan, k. s i varamakrishnan, Geoffrey b. sprin
Posted Date:
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