AIS_301_F11_Case_3_Accounts_Receivable

AIS_301_F11_Case_3_Accounts_Receivable -...

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AIS 301/701 – Case Study #3 M/W Sections Due Date: November 30, 2011 T/Th Sections Due Date: December 1, 2011 Total Points: 20  Dolls Corporation manufactures and markets adorable stuffed doll replicas of  collegiate athletic team mascots.  Its fiscal year-end is December 31.  On December  31, 2010, the corporation had an accounts receivable balance of $2,980,000 in its  general ledger.  That balance includes $230,000 owed by a customer, Retail, Inc. that  was declared bankrupt in November.  The Bankruptcy Court has informed Dolls  Corporation that it will receive approximately $40,000 in settlement of the Retail,  Inc. account.  The bankruptcy will be settled and payment will be made to Dolls  Corporation sometime during 2011. The unadjusted balance (before the 2010 adjustment for Bad Debts) in the Allowance  for Doubtful Accounts at December 31, 2010 was credit of $100,000.  In prior years,  Dolls Corporation has determined the ending balance in the Allowance account  using a balance sheet method – percentage of accounts receivable.  Historically, the  company has estimated that 10% of its year-end accounts receivable will be  uncollectible. At December 31, 2009, the company had a balance in the Allowance for Doubtful  Accounts account of $265,000 and an Accounts Receivable account balance of  $2,650,000.  Dolls Corporation also had 2009 net income of $425,000 on sales of  $12,500,000.  Bad Debt Expense for 2009 was $150,000. Mr. Shannon, president of Dolls Corporation, is a software engineer and has a 
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AIS_301_F11_Case_3_Accounts_Receivable -...

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