This preview shows page 1. Sign up to view the full content.
Unformatted text preview: We can infer this because the ending allowance balance in part a. above (30,000) is much greater than the desired balance derived in part ( b ) . The lower amount of bad debt expense computed in part ( b ) is compensating for overly aggressive estimates in the past. 2. a. Cash (A) increases by $240, and Deferred Membership Revenue (L) increases by $240. b. Since the $240 is membership revenue for a year, and 2 months pass between 12/1/99 and 1/29/2000, the company may now recognize 1/6 of the deferred revenue or $40. In terms of the BSE, Deferred Membership Revenue (L) decreases by $40, and Retained Earnings (SE) increases by $40, through the recognition of sales revenue....
View Full Document
This note was uploaded on 01/16/2012 for the course ACCOUNTING 15.501 / 1 taught by Professor Sugataroychowdhury during the Spring '04 term at MIT.
- Spring '04
- Managerial Accounting