Sales $750,000

Sales returns and allowances (40,000) Sales returns and allowances (40,000) accounting issues the
preceding illustration should not be used as a model for constructing a legal document; it is merely an
abbreviated form to focus on the accounting issues.

For the month of December, the records of Balin Corporation show the following information:

Cash received on accounts receivable P 70,000

Regression Analysis Method

Net sales 710,000

Rate 1%

Bad debt expense $ 7,100

Ace Co. prepared an aging of its accounts receivable at December 31, 2015 and determined that the net
realizable value of the receivables was $300,000

(accounting issues the preceding illustration should not be used as a model for constructing a legal
document; it is merely an abbreviated form to focus on the accounting issues. It is a statistical

Rate 1%

Bad debt expense $ 7,100

(b) The percentage of receivables approach would be affected as follows

Bad debt expense $ 7,100

n consignment

Allowance for Doubtful Accounts ......................... 7,100

Sales $750,000

Sales returns and allowances (40,000)

Net sales 710,000

75,000

Allowance for uncollectible accounts (2,000)

It becomes apparent that one should be alert to the stated assumptions intrinsic to a loan agreement.
Next, be aware of the “rule of 7823s.” Some loan agreements stipulate that prepayments will be based on
this tricky technique. A year has 12 months, and 12 + 11af2 + 10 + 9 + . . . + 1 = 78435;
abbreviated form to focus on the accounting issues.

For the month of December, the records of Balin Corporation show the following information:

Cash received on accounts receivable P 70,000

illustration should not be used as a model for constructing a legal document; it is merely an abbreviated
form to focus on the accounting issues. It becomes apparent that one should be alert to the stated
assumptions intrinsic to a loan agreement. 2) Bad Debt Expense ...........................................................
7,100

Allowance for Doubtful Accounts ......................... 7,100

Ace Co. prepared an aging of its accounts receivable at December 31, 2015 and determined that the net
realizable value of the receivables was $300,000

(2) Bad Debt Expense ........................................................... 7,100

Allowance for Doubtful Accounts ......................... 7,100

Sales $750,000
Sales returns and allowances (40,000) accounting issues the preceding illustration should not be used as
a model for constructing a legal document; it is merely an abbreviated form to focus on the accounting
issues.

Claim against shipper for goods lost in transit (November 2015) 3,000 Trade accounts receivable $
75,000

Bad debt expense $ 7,100

Allowance for Doubtful Accounts ......................... 7,100

Sales $750,000

Selling price of unsold goods sent by Vanoy o

Next, be aware of the “rule of 7823s.” Some lo (a) Describe fully both the direct write-off method and the
allowance method of recognizing bad debt expense.

Bad debt expense $ 7,100

Allowance f receivable at the end of a period.

(b) Discuss the reasons ABC Company provided some information on their financial records on
December 31, 2015:
Required: Classify these costs according to whether it is Fixed Cost or Variable Cost; whether it is Direct
materials, Direct labor, Factory overhead, Mktg. or Administrative exprense; and whether it is Product or
Period Cost

Fixed Cost or Variable Cost Direct materials, direct labor, Product or Period Cost
Factory overhead, Marketing or
Administrative
1.Variable Cost Direct Materials Product Cost
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(a) Describe fully both the direct write-off method and the allowance method of recognizing bad debt
expense.

Bad debt expense $ 7,100

Allowance for Doubtful Accounts ......................... 7,100

Sales $750,000

Bad debt expense $ 7,100

b) The allowance method is preferable because it matches the cost of making a credit sale with the
revenues generated by the sale in the same period and achieves a proper carrying value for accounts
receivable at the end of a period.

(b) Discuss the reasons ABC Company provided some information on their financial records on
December 31, 2015:

Required: Classify these costs according to whether it is Fixed Cost or Variable Cost; whether it is Direct
materials, Direct labor, Factory overhead, Mktg. or Administrative exprense; and whether it is Product or
Period Cost

Fixed Cost or Variable Cost Direct materials, direct labor, Product or Period Cost
Factory overhead, Marketing
or Administrative
1.Variab receivable at the end of a Direct Materials Product Cost
period.
(b) Discuss the reasons ABC Company
provided some information on their
financial records on December 31,
2015:
Required: Classify these costs according
to whether it is Fixed Cost or Variable
Cost; whether it is Direct materials,
Direct labor, Factory overhead, Mktg.
 or Administrative exprense; and
whether it is Product or Period Cost
Fixed Direct Product
Cost or materials, or
Variable direct labor, Period
Cost Factory Cost
overhead,
Marketing or
Administrative
1.Variabl Direct Product
e Cost Materials Cost
or Doubtful Accounts .........................
Required: Classify these At the time a
specific account is deemed
uncollectible, the account is removed
from accounts receivable and a
corresponding amount of bad debt
expense is recognized.

Bad debt expense $ 7,100

Allowance for Doubtful

Accounts ......................... 7,100

Sales $750,000
le Cost
2.Variable Cost Direct Labor Product Cost
3.Fixed Cost Factory Overhead Period Cost

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ssembly shop and retail sales store are housed in a Gig Harbor, Washington, boathouse. Below are
listed some of the costs that are incurred at the company.
Required:
For each cost, indicate whether it would most likely be classified as direct labor, direct materials,
manufacturing overhead, selling, or an administrative cost.
1.       The wages of employees who build the sailboats.
2.       The cost of advertising in the local newspapers.
expense. receivable at the end of a period.

(b) Discuss the reasons ABC Company provided some information on their financial records on
December 31, 2015:

Required: Classify these costs according to whether it is Fixed Cost or Variable Cost; whether it is Direct
materials, Direct labor, Factory overhead, Mktg. or Administrative exprense; and whether it is Product or
Period Cost
 Fixed Cost or Variable Cost Direct materials, direct labor, Product or Period Cost
Factory overhead, Marketing or
Administrative
1.Variable Cost Direct Materials Product Cost
or Doubtful Accounts .........................

Required: Classify these At the time a specific account is deemed uncollectible, the account is removed
from accounts receivable and a corresponding amount of bad debt expense is recognized.

Bad debt expense $ 7,100

Allowance for Doubtful Accounts ......................... 7,100

Sales $750,000

uss the reasons ABC Company provided some information on their financial records on December 31,
2015: b)

1.Variable Cost Direct Materials Product Cost

2.Variable Cost Direct Labor Product Cost
3.Fixed Cost Factory Overhead Period Cost
A trial balance before adjustment included the following

Allowance for Doubtful Accounts ......................... 7,100

Allowance for Doubtful Accounts ......................... 7,100

What is the balance on accounts receivable on December 31, 2014? 595,000

R receivable at the end of a period.

(b) Discuss the reasons ABC Company provided some information on their financial records on
December 31, 2015:

Required: Classify these costs according to whether it is Fixed Cost or Variable Cost; whether it is Direct
materials, Direct labor, Factory overhead, Mktg. or Administrative exprense; and whether it is Product or
Period Cost

Fixed Cost or Variable Cost Direct materials, direct labor, Product or Period Cost
Factory overhead, Marketing or
Administrative
1.Variable Cost Direct Materials Product Cost
equired: Classify these costs according to whether it is Fixed Cost or Variable Cost; whether it is Direct

........ 7,100
What is the balance on accounts receivable on December 31, 2014? 595,000

Required: Classify these costs according to whether it is Fixed Cost or Variable Cost; whether it is Direct
materials, Direct labor, Factory overhead, Mktg. or Administrative exprense; and whether it is Product or
Period Cost

Fixed Cost or Variable Cost Direct materials, direct labor, Product or Period Cost
Factory overhead, Marketing or
Administrative
1.Variable Cost Direct Materials Product Cost
2.Variable Cost Direct Labor Product Cost
3.Fixed Cost Factory Overhead Period Cost
A trial balance before adjustment included the following

Allowance for Doubtful Accounts ......................... 7,100

Allowance for Doubtful Accounts ......................... 7,100

Sales $750,000

Sales returns and allowances (40,000)

(b) Discuss the reasons (b) Discuss the reasons why one of the above methods is preferable to the other
and the reasons why the other method is not usually in accordance with IFRS.

ABC Company provided some information on their financial records on December 31, 2015:

Von Company provided the following data for 2014 in relation to its accounts receivable:

Debits

Instructions(b) Discuss the reasons ABC Company provided some information on their financial records
on December 31, 2015: b) The allowance method is preferable because it matches the cost of making a
credit sale with the revenues generated by the sale in the same period and achieves a proper carrying
value for accounts receivable at the end of a period.

What is the balance on accounts receivable on December 31, 2014? 595,000

A trial balance before adjustment included the following

Bad debt expense $ 7,100

Allowance for Doubtful Accounts ......................... 7,100

(b) Discuss the reasons (b) Discuss the reasons why one of the above methods is preferable to the other
and the reasons why the other method is not usually in accordance with IFRS.

ABC Company provided some information on their financial records on December 31, 2015:

Von Company provided the following data for 2014 in relation to its accounts receivable:
Debits

Instructions(b) Discuss the reasons ABC Company provided some information on their financial records
on December 31, 2015: b) The allowance method is preferable because it matches the cost of making a
credit sale with the revenues generated by the sale in the same period and achieves a proper carrying
value for accounts receivable at the end of a period.

What is the balance on accounts receivable on December 31, 2014? 595,000

A trial balance before adjustment included the following

Bad debt expense $ 7,100

Allowance for Doubtful Accounts ................. the balance on accounts receivable on December 31, 2014?
595,000

The allowance method is preferable because it matches the cost of making a credit sale with the
revenues generated by the sale in the same period and achieves a proper carrying value for accounts
receivable at the end of a period.

What is the balance on accounts receivable on December 31, 2014? 595,000

A trial balance before adjustment included the following

Bad debt expense $ 7,100 Allowance for Doubtful Accounts ......................... 7,100
b) The allowance method is preferable because it matches the cost of making a credit sale with the
revenues generated by the sale in the same period and achieves a proper carrying value for accounts
receivable at the end of a period.

What is the balance on accounts receivable on December 31, 2014? 595,000

A trial balance before adjustment included the following

Bad debt expense $ 7,100

Allowance for Doubtful Accounts ......................... 7,100

(a) Describe fully both the direct write-off method and the allowance method of recognizing bad debt
expense.

(b) Discuss the reasons ABC Company provided some information on their financial records on
December 31, 2015: b) The allowance method is preferable because it matches the cost of making a
credit sale with the revenues generated by the sale in the same period and achieves a proper carrying
value for accounts receivable at the end of a period.

What is the balance on accounts receivable on December 31, 2014? 595,000

A trial balance before adjustment included the following

Bad debt expense $ 7,100

Allowance for Doubtful Accounts ......................... 7,100

Bad debt expense $ 7,100

Allowance for Doubtful Accounts ......................... 7,100

Sales $750,000

Sales returns and allowances (40,000)

Von Company provided the following data for 2014 in relation to its accounts receivable:

Debits

Instructions

Bad debt expense $ 7,100

Sales returns and allowances (40,000)

What is the balance on accounts receivable on December 31, 2014? 595,000

Bad debt expense $ 7,100

Allowance for Doubtful Accounts ......................... 7,100

Sales $750,000

Sales returns and allowances (40,000)

Von Company provided the following data for 2014 in relation to its accounts receivable:

Debits

Instructions

Bad debt expense $ 7,100

Sales returns and allowances (40,000)

What is the balance on accounts receivable on December 31, 2014? 595,000

Bad debt expense $ 7,100

Allowance for Doubtful Accounts ......................... 7,100

Sales $750,000

Sales returns and allowances (40,000)

Von Company provided the following data for 2014 in relation to its accounts receivable:

Debits

Instructions